China Killing Its Own Car Market: Car-Rationing Spreads To Other Cities

The sprawling city Guangzhou in southern China sprung a nasty surprise on its (pop. 12.7 million citizens: it drastically slashed the number of new cars being registered. Observers predict that this move could have far-reaching consequences on the Chinese car market. On Saturday night, Guangzhou's city government announced that it will only allow 120,000 passenger vehicles to be registered over a one-year trial period, China Daily reports. Only 10,000 licenses will be handed out per each month. The new quota system went into effect today. Currently, the city adds more than 30,000 units to its streets each month. It is currently unclear how the limits will be administered.  The city announced that details will be forthcoming later. Guangzhou is the third Chinese city to cap passenger vehicle registrations. Shanghai limits its registrations to 20,000 per month and has been auctioning off its license plates for many years,, Prices are hovering at around 60,000 RMB ($9,400) per plate. Beijing started limiting car new registrations to 20,000 per month in January 2011. The plates are assigned via a lottery system. This system caused great frustration as many plates were snapped up by people who did not buy. Guiyang, the small capital of southwest China's Guizhou province, introduced a similar lottery system last year. Only 2,000 plates are made available each year. While the Shanghai system had been seen as an oddity, all eyes were on whether Beijing would set an example for other cities. Apparently, this is the case. "Should other cities follow suit, we can expect to see the Chinese car market fall considerably in the next few years," says Chinacartimes.   from The Truth About Cars http://www.thetruthaboutcars.com

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