China expected to delay new city-by-city limits on vehicle sales
China probably will avoid extending restrictions on vehicle purchases to smaller cities as the government relies on the auto industry to sustain economic growth, says a top industry association.
Seven cities in China, including Beijing, Shanghai, Guangzhou and Shenzhen, have capped the number of new license plates issued each year in an attempt to control the growth of the vehicle population. Local media reports have speculated on impending restrictions in cities such as Wuhan and Jinan in a bid to ease gridlock and air pollution.
"Local governments are facing huge pressure to boost economic growth and they need robust vehicle sales at a time like this," said Cui Dongshu, secretary general of the trade group. "We don't think there will be more cities limiting vehicle purchase during the next five years."
The vehicle restrictions were enacted as part of a government response to address worsening air pollution in its major cities. But the weak economic growth prompted policymakers to cut the car purchase tax last year to encourage sales.
The auto industry also was left off a list of sectors that the government identified as suffering from excess capacity, despite forecasts that car factories will churn out millions more vehicles than there is demand for.
A stay on additional vehicle purchase curbs will benefit Volkswagen AG, General Motors, Hyundai Motor Co. and their local manufacturing partners.
Carmakers were left reeling as major markets such as Beijing and Guangzhou imposed annual quotas to control gridlock and pollution. Early last year, at least five more major cities reportedly were considering license plate restrictions, according to the state-run Economic Daily.
In an about-face, the government halved the purchase tax on small passenger vehicles in October to bolster the industry after sales fell for a fifth straight month amid a stock-market rout.
The measure revived demand, and the car association expects annual sales to rise 10 percent annually through 2020 to 34 million vehicles.
Even so, existing curbs in several big cities have erased about 2 million potential sales last year, according to the China Association of Automobile Manufacturers.
In Guangzhou and Shenzhen, sudden announcements by the municipal authorities of the restrictions sparked a mad rush by consumers to place their orders at dealerships, only for sales to plummet as the curbs took effect.
"Local governments are facing huge pressure to boost economic growth and they need robust vehicle sales at a time like this," said Cui Dongshu, secretary general of the trade group. "We don't think there will be more cities limiting vehicle purchase during the next five years."
The vehicle restrictions were enacted as part of a government response to address worsening air pollution in its major cities. But the weak economic growth prompted policymakers to cut the car purchase tax last year to encourage sales.
The auto industry also was left off a list of sectors that the government identified as suffering from excess capacity, despite forecasts that car factories will churn out millions more vehicles than there is demand for.
A stay on additional vehicle purchase curbs will benefit Volkswagen AG, General Motors, Hyundai Motor Co. and their local manufacturing partners.
Carmakers were left reeling as major markets such as Beijing and Guangzhou imposed annual quotas to control gridlock and pollution. Early last year, at least five more major cities reportedly were considering license plate restrictions, according to the state-run Economic Daily.
In an about-face, the government halved the purchase tax on small passenger vehicles in October to bolster the industry after sales fell for a fifth straight month amid a stock-market rout.
The measure revived demand, and the car association expects annual sales to rise 10 percent annually through 2020 to 34 million vehicles.
Even so, existing curbs in several big cities have erased about 2 million potential sales last year, according to the China Association of Automobile Manufacturers.
In Guangzhou and Shenzhen, sudden announcements by the municipal authorities of the restrictions sparked a mad rush by consumers to place their orders at dealerships, only for sales to plummet as the curbs took effect.
