Caixin
May 28, 2019 07:32 PM
BUSINESS & TECH

Shenzhen, Guangzhou to Ease Car Ownership Restrictions

Guangzhou and Shenzhen are preparing to boost their license plate quotas by half next year. Photo: VCG
Guangzhou and Shenzhen are preparing to boost their license plate quotas by half next year. Photo: VCG

The southern megacities of Guangzhou and Shenzhen will ease up on car ownership restrictions in a bid to boost China’s flagging auto sales — one of the country’s important economic drivers.

Both cities are planning to increase the quota of new license plates given out each month, a policy that has traditionally been used to help control congestion and pollution by limiting the number of cars on the road, according to the state-owned Southern Daily (link in Chinese). Other cities will not be allowed to restrict the number of plates, the report said.

Both moves are part of a broader policy being rolled out by Guangdong, one of China’s wealthiest provinces where both Guangzhou and Shenzhen are located. No timetable or other specifics were given for the shift.

The move comes just a month after the National Development and Reform Commission (NDRC), China’s state planner, issued a broader policy calling for all cities that limit license plates to increase their quotas. It specifically said all such cities should issue 50% more license plates in 2019 compared with this year’s levels, and 100% more in 2020.

Guangzhou and Shenzhen currently limit the number of new license plates issued each year to 120,000 and 100,000, respectively, in a bid to help planners manage local traffic. Demand far outstrips supply those cities, with just 0.24% of bidders receiving a license in this month’s draw in Shenzhen. Licenses averaged 42,846 yuan ($6,200) this month in Guangzhou and 69,873 yuan in Shenzhen. Despite the high prices, demand is always strong because licenses can often be sold later for a profit on secondary markets.

The easing of restrictions could provide needed fuel to boost China’s flagging auto industry, said Liu Xiang’e, head of the Automobile Dealers of Shenzhen. Sales of passenger vehicles fell nearly 12% year-on-year to about 6.6 million in the first four months of 2019, providing more bad news for a market that saw its first annual dip in sales in almost three decades for all 2018.

The sluggish auto market has become a major drag on China’s overall consumption, according to the National Bureau of Statistics. Growth in retail sales — which includes spending by governments, businesses and households — dropped to 7.2% year-on-year in April, the lowest level in 16 years, according to the NBS.

In December, Shenzhen and Guangzhou, which rank among China’s wealthiest cities, delayed the rollout of a new auto emission standard set to take effect that month as car sales stalled. At present there is no indication that the cities will delay implementation again from the new schedule of July 1.

Contact reporter David Kirton (davidkirton@caixin.com)

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