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License Plate Lottery Meant To Curb Beijing Traffic

Vehicles sit in a traffic jam during a weekday rush hour earlier this month in Beijing, which has been ranked among the world's most gridlocked cities. Beijing authorities' latest effort to cut the number of vehicles on the roads — a license plate lottery — has been met with criticism from auto dealers and some residents. (AFP/Getty Images)

Officials trying to radically reduce traffic in Beijing — ranked among the world's most gridlocked cities — are limiting the number of license plates issued this year. But auto dealers say the move is hurting sales, and some Beijingers say they resent the restriction.

Last year, motorists spent an average of 62 minutes every day on their rush-hour commutes in Beijing, where traffic jams are pretty much a daily occurrence. And along with Mexico City, Beijing was found to have the world's worst traffic in an IBM survey of global commuter pain.

But the latest effort by Beijing authorities to limit the number of new cars on the road isn't well-received by everyone.

"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 1 Series, but she can't buy her dream car until she wins the license plate lottery.

For the first time, Beijing authorities are limiting 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 secondhand car dealers.

"It's a huge attack for the secondhand car industry," says Zhou Mingbing. "It's like an magnitude-8 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 car buyers 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 car dealers and car makers that have been adding at a furious pace? It's not good news."

The license plate lottery was broadcast live online Wednesday. 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's auto situation," Lee says. "Many people, they are not planning to buy a car, but as long as you give this policy, many 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 of 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.

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Transcript

RENEE MONTAGNE, host:

For American carmakers, China has been bright spot. Last year, General Motors sold more cars in China than it did in the U.S. But all those car sales have become a headache for Beijing. In one episode last summer, there was a 60 mile nine-day traffic jam outside the capital. City officials are now trying to reduce the number of cars on the road. Today they are holding their first ever license plate lottery.

NPR's Louisa Lim reports.

LOUISA LIM: I'm sitting in a traffic jam again, which is pretty much a daily occurrence for many Beijing residents. In fact, Beijing has spent, on average, 62 minutes every day on their rush hour commutes. IBM even helpfully did a survey of global commuter pain - this ranked Beijing, along with Mexico City, as having the world's worst traffic. Now, however, Beijing authorities have taken action, limiting the number of new cars on the road and not everybody's happy about that.

Ms. ELLA LEE: For me, I really hate this kind of limit. I hate it because I'm the kind of person never win the lottery. So I'm very worried, actually.

LIM: Ella Lee is a smart 20-something who works for a Western company. She has her eye on a BMW Series One. But she can't buy her dream car until she wins the license plate lottery. Beijing is only issuing 240,000 plates this year, less than a third the number issued last year.

(Soundbite of music)

LIM: That means Beijing's car salesrooms are ominously quiet. For Chen Xiaojun, who sells Chinese-made cars, mostly a minor brand called Haima, it's a disaster.

Mr. CHEN XIAOJUN (Car salesman): (Foreign language spoken) (Through Translator) In the past we sold 50 cars a month. Now we can probably only sell 10. 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.

LIM: Insiders estimate about 100 Beijing car dealers will close down, mostly lower-end and domestic brands. The worst off are second-hand car dealers like Zhou Mingbing.

Mr. ZHOU MINGBING (Car dealer): (Foreign language spoken) (Through Translator) It's a huge attack for the second-hand car industry. It's like an eight magnitude earthquake. For one month we haven't earned a single penny. We just sit here waiting all day.

Unidentified Woman #1: (Foreign language spoken)

LIM: When the policy was announced at three o'clock one afternoon just before Christmas, it caused a frenzy. Would-be car buyers had until midnight that day to beat the deadline, and 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. But Beijing's curbs coincide with the withdrawal of government stimulus measures to boost car sales.

CLSA's car analyst, Scott Laprise, says cars sales are coming down to earth with a bump.

Mr. SCOTT LAPRISE (Car analyst, CLSA): Well, it is a very big deal. We've come off of 40, then 30, and 30 percent growth. We're forecasting 13; we've been forecasting this for about a year and a half. So we have been expecting these policies to cool down. So does this impact on domestic carmakers and domestic car dealers that have been adding at a furious pace? It's not good news.

Unidentified Woman #2: (Foreign language spoken)

LIM: Today's first ever license plate lottery was broadcast live online. Only one in 10 applicants got lucky, and as predicted, Ella Lee was not among them. She doubts the new system will work.

Ms. LEE: I don't think this will effectively control Beijing auto situation. Many people, they are not planning to buy a car, but as long as you give this policy, many people think, oh, it's getting hard now and I have to be in line.

LIM: 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.

Louisa Lim, NPR News, Beijing. Transcript provided by NPR, Copyright NPR.

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