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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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