The Financial Times, March 22, 2013
The “Chinese dream” is to own a flat, a car – and, increasingly, a number plate.
As the world’s biggest car market battles some of the world’s worst traffic congestion and air pollution, licence plate rationing has driven prices up to the point where a Shanghai plate costs nearly three times as much as a cheap Chinese car.
Touts throng the entrance of the art deco auction house near Shanghai’s famous Bund, where owners queue up to register for Saturday’s monthly municipal plate auction – Shanghai’s largely unsuccessful effort to control the number of cars on the city’s narrow and chaotic roads.
Bank of Shanghai has even set up a desk inside, just in case any of China’s notoriously cash-rich car buyers – who frequently turn up at dealerships with pockets stuffed with renminbi – cannot quite manage the Rmb90,000 ($14,500) likely to be needed to get one of the 9,000 plates in this month’s auction.
“The price will just keep rising, so I want to get one as soon as possible,” says Jin Xiaowei, a would-be car owner who says he has no hope of getting a plate unless he uses a middleman to bid for him.
Shanghai is trying to crack down on middlemen, who often double as touts, hoarding and reselling plates on the second-hand market.
To make matters worse, many buyers say they cannot get a plate at all unless they pay Rmb500-Rmb1,000 in commission to the middlemen. “I won’t bid myself,” says Mr Jin. “The prices change dramatically in the last minute of the auction, and you cannot evaluate the price as accurately as the [professionals] do.”
“Car plate prices have recently gone beyond our imagination,” state media quoted Jiang Ping, Shanghai’s deputy mayor, as saying this week. “We need to take various means to bring them down.”
At a time when air pollution and congestion are some of China’s biggest political issues, several cities are considering ways to reduce the number of cars on urban roads, either through congestion fees, auctions or a plate lottery.
Beijing offers 20,000 plates a month by lottery – but some residents complain it is easier to win a fortune in the Chinese state lottery than to win the plate lottery. The southern city of Guangzhou is running a one-year trial of a hybrid auction-lottery system, and Guiyang has a limited lottery.
But the restrictions are not conquering congestion, says Bill Russo of Synergistics auto consultancy, and a former head of Chrysler in China. “Such measures attack the symptoms but not the root causes: weak enforcement of traffic laws, lack of parking and inconvenient public transport. Tokyo and New York have more cars per capita than Beijing but nowhere near the same traffic congestion.”
The policy also inadvertently penalises local brands, he says: “When Chinese consumers have to spend that kind of money to put a car on the road, they tend to buy one that has more value than the registration plate. This does not favour domestic carmakers, who tend to offer low-priced cars.”
With additional reporting by Yan Zhang in Shanghai
Click here to read this article at FT.com
As the world’s biggest car market battles some of the world’s worst traffic congestion and air pollution, licence plate rationing has driven prices up to the point where a Shanghai plate costs nearly three times as much as a cheap Chinese car.
Touts throng the entrance of the art deco auction house near Shanghai’s famous Bund, where owners queue up to register for Saturday’s monthly municipal plate auction – Shanghai’s largely unsuccessful effort to control the number of cars on the city’s narrow and chaotic roads.
Bank of Shanghai has even set up a desk inside, just in case any of China’s notoriously cash-rich car buyers – who frequently turn up at dealerships with pockets stuffed with renminbi – cannot quite manage the Rmb90,000 ($14,500) likely to be needed to get one of the 9,000 plates in this month’s auction.
“The price will just keep rising, so I want to get one as soon as possible,” says Jin Xiaowei, a would-be car owner who says he has no hope of getting a plate unless he uses a middleman to bid for him.
Shanghai is trying to crack down on middlemen, who often double as touts, hoarding and reselling plates on the second-hand market.
To make matters worse, many buyers say they cannot get a plate at all unless they pay Rmb500-Rmb1,000 in commission to the middlemen. “I won’t bid myself,” says Mr Jin. “The prices change dramatically in the last minute of the auction, and you cannot evaluate the price as accurately as the [professionals] do.”
“Car plate prices have recently gone beyond our imagination,” state media quoted Jiang Ping, Shanghai’s deputy mayor, as saying this week. “We need to take various means to bring them down.”
At a time when air pollution and congestion are some of China’s biggest political issues, several cities are considering ways to reduce the number of cars on urban roads, either through congestion fees, auctions or a plate lottery.
Beijing offers 20,000 plates a month by lottery – but some residents complain it is easier to win a fortune in the Chinese state lottery than to win the plate lottery. The southern city of Guangzhou is running a one-year trial of a hybrid auction-lottery system, and Guiyang has a limited lottery.
But the restrictions are not conquering congestion, says Bill Russo of Synergistics auto consultancy, and a former head of Chrysler in China. “Such measures attack the symptoms but not the root causes: weak enforcement of traffic laws, lack of parking and inconvenient public transport. Tokyo and New York have more cars per capita than Beijing but nowhere near the same traffic congestion.”
The policy also inadvertently penalises local brands, he says: “When Chinese consumers have to spend that kind of money to put a car on the road, they tend to buy one that has more value than the registration plate. This does not favour domestic carmakers, who tend to offer low-priced cars.”
With additional reporting by Yan Zhang in Shanghai
Click here to read this article at FT.com
