Beijing Measures Ease Traffic. At Car Dealers

Bertel Schmitt
by Bertel Schmitt

Beijing is in a state of confusion after China’s capital drastically slashed the number of license plates available. You literally have to win the lottery to get a plate. Most winners keep the prized (but non-transferable) possession at home. Writes the party organ People’s Daily: “Only about 11 percent of those who won rights to car licenses plates through the new lottery system bought cars in Beijing in January, the first month after restrictions were implemented, according to Chi Yifeng, general manager of Beijing Yayuncun Automobile Transaction Market, the biggest car retail market in China. “

According to the manager, only 2,000 vehicles were purchased citywide after 17,600 plates were approved through the lottery. Instead of buying cars, Beijingers now hoard license plates. The paper found a salesman at a Chery dealership in Beijing who said that just 10 customers with plate numbers visited the shop in January.

Previously, Chi rechkoned that the car restriction regulation would cause about one-third of Beijing’s car dealers to go out of business. Now he forecasts that half will close.

TTAC’s forecast: The limitations will be watered down and will eventually go away.

Chen Jianguo, deputy head of the industrial coordination department of the powerful National Development & Reform Commission (NDRC), already warned that purchase restrictions are not only insufficient to deal with the congestion problem, but could harm consumers and the industry overall, reports Gasgoo. Like many his colleagues in the West, Chen recommends usage-based taxation instead.

On Friday, China passed a new law that decreases taxes on cars with smaller engines, while raising the tax on cars with bigger bore motors, Xinhua reports.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • MarkMQD MarkMQD on Feb 28, 2011

    So am I correct in thinking half the amount of plates were taken away? Only half the amount given out per year were distributed?

  • Philosophil Philosophil on Feb 28, 2011

    I bet the government there wasn't expecting that. One possible solution might be to revoke the license plate if an automobile is not purchased within a specific time-frame (say 2-3 months). This would, of course, create even more bureaucracy. The main problem with taxing use (and this is true of almost all examples of this) is that while it appears to play the 'freedom of choice' card, what really ends up happening is that wealthier people end up having more real choices than those with less commodity power. Thus, while a wealthy person can afford the higher taxes (and thus can realistically choose to own a bigger, high polluting vehicle if they prefer), the added costs of owning such vehicles will force a person with less commodity power to 'choose' a smaller, low polluting vehicle. Since the program is aimed at securing common or public goods (e.g., breathable air, public health, easing traffic burdens, and so on), then it will make it appear as if wealthy people can be exempted from such public policies, while low-income earners have their choices limited even more than they already are (by making things even more expensive than they already are). Rather than all people sharing equally in the promotion of such 'public goods,' low-income persons will end up having to bear the greater burden of such programs (thereby creating a increased sense of inequity, unfairness, or injustice within that society). When trying to promote or advance some common or 'public good,' it is crucial that any restrictions or burdens required for advancing such goods be borne in an equitable manner across all social, political, and economic groups. Anything else will result in an increase sense of injustice within that society, and a sense of injustice among citizens is not conducive to a well-ordered society.

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    • Philosophil Philosophil on Feb 28, 2011

      @ PeriSoft Beautifully articulated. Well done.

  • Blowfish Blowfish on Feb 28, 2011

    Perhaps in the end the govt didnt want too many cars on the road, clog traffic, more reserved for the real haves not the common bourgeois, then more people buy cars will also help the economy too. Life is always a double edged sword! just opt for the lesser evil.

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