Vehicle Compliance Certificate Data Sharing System Launches June 15, Streamlining Registration but Disrupting Dealer Financing Models

The General Offices of the Ministry of Industry and Information Technology (MIIT) and the Ministry of Public Security (MPS) jointly issued a notice announcing the nationwide implementation of an online verification mechanism for motor vehicle Certificate of Conformity (CoC) information, effective June 15, 2024. Under this mechanism, traffic management authorities can instantly compare CoC data against relevant official announcements and management system records when registering new vehicles. If the information matches, license plates and registration certificates will be issued immediately. This mechanism applies to domestically produced passenger cars. Manufacturers are required to upload electronic CoC information within 48 hours of a vehicle’s production, enabling real-time data sharing between the two ministries. Additionally, a pre-inspection system for domestically produced passenger cars will be fully implemented. Vehicles that have undergone pre-inspection will no longer need to submit VIN rubbings or standard vehicle photographs during license plate registration. This reform streamlines vehicle inspection and registration procedures. Consumers purchasing domestically produced passenger cars free of liens can now complete vehicle purchase, tax payment, and license plate registration all on the same day—without having to drive to a vehicle management office for on-site inspection—thereby avoiding additional fees and opaque charges often associated with dealership-assisted registration services. The CoC, often referred to as a vehicle’s “birth certificate,” serves as the sole technical proof confirming a vehicle’s compliance with manufacturing standards and remains valid throughout the vehicle’s entire lifecycle. Currently, most auto dealers pledge CoCs to financial institutions to secure inventory financing, resulting in a tripartite financing model involving dealers, manufacturers, and lenders. Although CoCs have been digitized, consumers may still encounter registration issues if financial institutions retain control over inventory vehicles or mark CoCs as pledged. The notice does not alter the legal nature of the CoC, but the new online sharing mechanism could disrupt existing financing practices based on CoC pledges. Auto dealers will need to adjust their business strategies—such as closing or selling unprofitable outlets, coordinating sales targets with OEMs, accelerating sales velocity, and reducing non-core investments—to address persistent industry challenges including difficult and costly access to financing.