Beijing Car Market receives massive shock – Chinese brands to feel it the most

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With Beijing City set to issue only 20,000 license plates per month in 2011, it appears that the city’s auto market is going to be in a free fall situation in next year, and has managed to spark major sales of cars in December 2010 with last week seeing 30,000 cars sold and the week before 20,000 due to the gigantic cuts that the government is about to introduce.

With only 240,000 license plates available for the whole of 2011, Beijing is expected to have small sales next year. In comparison 2009 sales in Beijing alone reached 580,000 units, sales for 2010 are expected to be in the 850,000 area, so by limiting sales to 240,000 units per year the Beijing government are planning to compress sales by 70%.

For car dealers in Beijing, 2011 is expected to be a rough year with many expecting to close up shop as any profit will be gone in an instant. The vast majority of car dealers in China are still at the infancy stage and have not yet developed their after sales service offerings, thus the biggest source of profit is from new cars, but now that the new car market will be drying up in 2011. One alternative that is on the cards at the moment is registering cars outside of Beijing and in surrounding provinces such as Hebei and Shandong or even opening new dealerships in these areas.

China is famous for its regulation, bureaucracy and crazy amounts of red tape, but the introduction of the limit for registration plates is going to be the fastest and easiest way to kill Beijing’s auto market in the most effective way. However bad Beijing’s traffic is going to get, it is only going to get worse as the automobile is still a highly desired prize by the majority of middle class Beijing citizens, they will only register their cars in outlying cities and drive them into Beijing as they see fit. Although other second and third tier cities are already looking at Beijing’s license plate policy and we may see similar ideas introduced in other cities. The whole new car market will be affected with Chinese brands set to lose out the most but the big winners will be the second hand car market – those that already have a Beijing license plate and wish to sell their car will quickly find that they are worth quite a bit more as of January 1st 2011 when this policy goes into effect.

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12 Comments

  • james
    December 24, 2010

    So finally Beijing takes the Shanghai approach. My question is will Beijing also start banning cars with waidi plates from certain highways during rush hours, much like how Shanghai currently does? If not, what teeth does this new regulation have to really prevent people from gobbling up 津 or 冀 plates?

  • Bitter Kicmchi Boy
    December 25, 2010

    Hyundai will feel the sting the most. Good!

  • CCT
    December 25, 2010

    Thought I saw you in London the other week…..

    Changing the driving license to a much stricter test and a major focus on driving etiquette would be the best way forward rather than limiting car no’s.

  • woxihuanpijiu
    December 25, 2010

    Won’t this just create a MASSIVE blackmarket for license plates? Every man and his dog will still want plates even if they may not be looking to buy a car until later in the year….. just in case they miss out when the time comes.

    If its purely about air quality they could try a different approach like giving priority to vehicles with higher emission and safety standards first.

  • Gerald
    December 25, 2010

    James – yes, under the new rules waidi cars are prohibited within the 5th ring road during rush hours (7-9am, 5-8 pm) on weekdays.

  • Gerald
    December 25, 2010

    I believe the following statement is inaccurate:

    “The whole new car market will be affected with Chinese brands set to lose out the most but the big winners will be the second hand car market – those that already have a Beijing license plate and wish to sell their car will quickly find that they are worth quite a bit more as of January 1st 2011 when this policy goes into effect.”

    My understanding is that the license plates stays with the original owner and will not be transferable to the second owner. It was stated quite clearly that the original owner can exchange the old plates for new ones if they wish to buy a new car, without having to take part in the lottery. Those buying a car 2nd-hand and not having old plates from a car that they themselves have sold will need to go through the lottery to get plates.

    What this also means is that the 2nd-hand auto market here is going to take a hit as well.

  • Gerald
    December 25, 2010

    They have addressed this issue – there are some strict rules about who can participate in the lottery, such as, lottery participants must have a driver’s license, they also must not already have car registered in their name, if they “win” the lottery the car has to be registered in their name, and after winning the lottery they have 6 months to purchase and register a car. There are also some rules relating to Beijing residency.

    So I don’t see much possibility of a black market here, unless you are talking about fake plates…

  • Michael
    December 26, 2010

    I personally felt the traffic light system in Beijing (or China) has to be improved. I’ve been staying here for more than 10 years now and still not getting use to the traffic light system.

    For example, a car can do a right turn without the green light. At the same time, the pedestrian light is on Green. Stupid zebra crossing does not work as well. No one obey them.

  • Michael
    December 26, 2010

    Totally agreed!

  • December 29, 2010

    Since your in Beijing could you tell me if you see a lot of BYD cars on the roads there? Thanks.

  • Gerald
    December 29, 2010

    Yes, plenty of F3′s and F0′s on the roads in BJ. Also seen a few F6 but not that many.

  • arif
    January 19, 2012

    i hav to plan to visit china for buying automobile spare parts for cars…so where i shall go shangai or beijing……….tel me………………………..

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