The new rules amend the market's entry and exit mechanism, treating domestic-and foreign-funded enterprises equally.

As long as an enterprise obtains a business license and recycling qualification lawfully, it can engage in the recycling and dismantling business of scrapped motor vehicles.

"With the break-up of the monopoly, other capital will enter the industry and market competition will be intensified, which is expected to not only encourage owners to scrap obsolete cars, but also enhance the enterprises' recycling efficiency of scrapped motor vehicles," Wang said.

The market competition urges the recycling enterprises to improve their recycling and dismantling technology, which matches the new rules' emphasis on environmental protection.

By encouraging the remanufacturing and reuse of the scrapped vehicles' engine, gearbox, front and rear axle and frame, the new rules will help establish a long-term mechanism for vehicle scrapping and renewal, speed up the elimination of obsolete motor vehicles and alleviate air pollution, according to the China Association of Automobile Manufacturers website.

Meanwhile, as waste oil, heavy metal and other pollutants are produced in the recycling and dismantling of scrapped vehicles, the new rules urge enterprises to comply with environmental protection requirements, especially in terms of storage, equipment, facilities and operation specifications.

According to the new rules, the supervision and punishment of environmental violations will be further enhanced, according to Wang.

To ensure the source of disassembled automobile parts can be checked, an information system will be established by a department of the State Council, according to the CAAM website.

Based on the new rules, the recycling enterprises should record specific information about the five main parts, including number, model and whereabouts, and upload the information to the system.

Compared with petrol vehicles, electric cars have differences in recycling and dismantling and have not yet entered the stage of large-scale scrapping.

Therefore, rules on recycling new energy vehicles will be explored and created separately, according to the CAAM website.