Car dealerships in the southern Chinese megacity of Guangzhou were packed with customers on June 30; residents rushed to buy vehicles after authorities announced that the city will begin limiting car purchases on July 1 to ease the city's traffic woes and reduce pollution, reports the Shanghai-based First Financial Daily.
The city government announced during a press conference Saturday night that it would only allow 120,000 passenger vehicles to be registered over a one-year trial period, during which only 10,000 licenses will be handed out each month. The city will suspend registration and transfer of registration for small and medium passenger cars from July 1 to July 31.
Guangzhou also announced it would enact measures in which passenger cars would be required to travel in designated areas during specific time periods. The move marks the latest decision by a first-tier Chinese city to introduced car purchase restrictions, following Beijing and Shanghai, the daily said.
The city government said it will release a more detailed car quota plan by the end of July.
Beijing currently limits license plate registrations to 240,000 a year, via a lottery system. Shanghai has introduced its own license plate restrictions through an auction. Guangzhou is reportedly likely to follow Shanghai's model to strike a balance between easing the city's traffic jams and meeting car purchase demands.
Due to car purchase restrictions, all preferential offers for buying mainstream car brands have been canceled, the newspaper reported.
The newspaper said that the car purchase limits means Guangzhou car dealers will face a much smaller market. Data showed that Guangzhou issued 226,000 license plates for new cars in 2011, or an average of 19,000 a month. Under the new quota system only 10,000 licenses will be handed out each month.
Guangzhou has been a brisk car marketplace and site for competition among various car brands. Most mainstream car firms have more than 10 dealerships in the city. Once the market is reduced, dealerships will face a major reshuffle.
When interviewed, one dealer said the new quota will negatively impact his store's sales amid an already weak car market this year. Another dealer said, however, that car purchase limits may only have a small impact given that over 20% of new car license plates are issued vehicles intended to replace older models.
The new policy could therefore deal a larger blow to secondhand dealers, an industry expert said.