Beijing to play host to the biggest fight of the decade: Tumbling car industry V’s The Environment

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In mid 2007 the Beijing Municipal Government lead the way in China by forcing drivers off the roads on certain days depending on the last number in their registration plate, this system was run an odd/even basis and did go a long way to improving air quality prior to the Beijing Olympics in 2008, however Beijing’ers are not for taking to public transport and many residents just bought a second car to get around the new restrictions. In 2009 the Chinese car industry had an irregular heartbeat at the beginning of the year which forced the Central Government into ER-Doctor mode and lowered the sales tax on sub 1.6L cars, car sales exploded over night, in a bid to slow the car market down in 2010 they raised sales tax on sub 1.6L cars from 5% to 7.5% which didn’t do much at all as car sales reached 18 million units in 2010. For 2011 Beijing Municipal Government decided enough was enough and planned to put just 20,000 license plates out for Beijing residents only (i.e. if you didn’t have a Beijing resident card but lived and worked in Beijing, you could not own a car with a Beijing plate) and if you had a non Beijing plated car, you cannot be on Beijing’s roads at a certain time.

Now the National Development and Reform Council (NDRC) are listening to the complaints of automakers, Chinese local brands have lost almost 70% of the market to foreign brands, and foreign brands themselves are not doing too well, especially as the market has shrunk by from just under 1 million vehicles sold in Beijing in 2010 to just a maximum of 240,000 vehicles being sold in Beijing in 2011.

Reuters explains some more:

In a report submitted to China’s State Council, the National Development and Reform Commission also linked Beijing’s steps to tackle ever-worsening traffic gridlock to slowing auto sales in the country, the newspaper said.

The NDRC along with other unspecified organisations were also appealing to make adjustments to similar policies by other local governments, it said, but did not elaborate.

NDRC and Beijing city government officials could not be reached immediately for comment.

Beijing Municipal Government are likely to cite the terrible traffic in Beijing city center as a major reasoning to limit car sales in China, but we personally think that the limitations will stay in place but the quota could be raised as a possible face saving maneuver by both parties who both obviously want to walk away feeling like they’ve won something in negotiations.