Officials in Beijing are trying to radically reduce the number of cars on the road. One way is with a license plate lottery.
To reduce the city’s chronic gridlock, only 240,000 Beijing license plates are being issued this year. That’s one-third the number issued last year. Car dealers say the move will hurt sales.
Traffic jams are pretty much a daily occurrence for Beijing residents. Last year, Beijingers spent an average 62 minutes every day on their rush-hour commutes.
IBM did a survey of global commuter pain, and it ranked Beijing, along with Mexico City, as having the world’s worst traffic. Beijing authorities have taken action by limiting the number of new cars on the road but not everybody is happy about it.
“I really hate this kind of limit,” says Ella Lee, a 20-something who works for a Western company. “I hate it because I’m the kind of person who never wins the lottery. So I’m very worried actually.”
Lee has her eye on a BMW Series One, but she can’t buy her dream car until she wins the license plate lottery.
For the first time, Beijing authorities are limiting number plates in the city. They’re only issuing 240,000 this year, less than one-third of the number issued last year.
That means Beijing’s car salesrooms are ominously quiet.
“In the past, we sold 50 cars a month, now we can probably only sell 10,” says Chen Xiaojun, who sells Chinese-made cars — mostly a minor brand called Haima.
“We’ve already laid off three employees. Now we’re wondering if we can continue in this business. We probably make less money than we would farming the land.”
Insiders estimate about 100 Beijing car dealers will close, mostly lower-end and domestic brands. The worst-off are second-hand car dealers.
“It’s a huge attack for the second-hand car industry,” says Zhou Mingbing. “It’s like an eight magnitude earthquake. For one month, we haven’t earned a single penny. We just sit here waiting all day.”
When the policy was announced at 3 p.m. one day just before Christmas, it caused a frenzy. Would-be carbuyers had until midnight that day to beat the deadline. They flocked to dealerships, buying up anything they could lay their hands on.
China’s car market had been the world’s fastest growing with 47 percent growth two years ago. Last year, car sales were up by 33 percent. But Beijing’s curbs coincide with the withdrawal of government stimulus measures to boost car sales.
Analysts say imported brands are likely to suffer less than low-end domestic ones, and the impact of the Beijing restrictions will be limited, as long as other cities don’t follow suit. But China’s auto industry is largely sentiment-driven, and it will be hit by tightening-measures.
“We’ve come off of 40, then 30 percent growth,” says car analyst Scott Laprise of CLSA. “We’re forecasting 13 — we’ve been forecasting this for a year and a half. We have been expecting these policies to cool down. Does this impact on domestic cardealers and carmakers that have been adding at a furious pace? It’s not good news.”
The license plate lottery was broadcast live online. Only one in 10 applicants got lucky — and as predicted, Ella Lee was not among them.
“I don’t think this will effectively control Beijing auto situation,” Lee says. “Many people not planning to buy car, but think as long as there’s this policy, people think, ‘Oh it’s getting hard now, I have to be in line’.”
People watching the lottery online were critical of the process. Some even offered to sell their own cars to the losers, heralding the birth of a possible new black market.
One industry is benefiting from all this: the rental car industry. Anecdotal reports say some rental agencies have seen business skyrocket by 70 percent.
Quotas or not, Beijing’s days of gridlock look set to continue. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.
