Beijing’s local government on Thursday unveiled a slew of measures, including limiting the quota for new small passenger vehicle to 20,000 per month in 2011 to ease the city’s chronic traffic jams and cut pollution.
“Sentiment is horrible and that’s the problem,” said Scott Laprise, an auto analyst at CLSA. “People sell their shares first and ask questions later.” However, the initial impact was unlikely to be significant as only about 5 percent of China’s cars are sold in Beijing , he said.
“If other cities start to at least talk about it, that will affect sales,” said Laprise said.
Several other cities including Shanghai have long placed limits on the number of cars that may hit the road each month through measures such as auctioning license plates.
More than 2,000 new vehicles drive onto roads in the capital every day, and statistics from municipal transportation authorities suggest Beijing — a city of 19 million people — could have 7 million vehicles on the road by 2012. Some people questioned how effective the quotas would be as it was unclear whether the new rules would affect purchases by the powerful central government agencies which proliferate in smoggy Beijing.
China’s No.2 automaker Dongfeng Motor led losses, falling more than 9 percent, its biggest daily drop since January 2009.
Brilliance China Automotive Holdings Ltd., the sole distributor of Bayerische Motoren Werke AG cars in China and the country’s 8th largest automaker, slumped 7.5 percent to a three-month closing low.
Guangzhou Automobile Group Co Ltd., the China partner of Toyota Motor and Honda Motor, fell 4.7 percent in a Hong Kong market down 0.3 percent.
The share movements of Shanghai-listed automakers were more subdued. Top Chinese carmaker SAIC Motor Corp Ltd., a General Motors partner, ended down 2.3 percent, while Chongqing Changan Automobile Co Ltd , which runs a three-way tieup with Ford Motor and Mazda Motor was down 2.1 percent.
Foreign automakers questioned about the moves remained sanguine, counting on tapping growth in inland areas where per capita car ownership remain low.
Terry Johnsson, vice president of GM’s China operations said less than a quarter of its sales come from big coastal cities now and he would not be surprised to see 60 percent of its business coming from tier 3 and tier 4 cities in the 5 years.
Most of the 66 new dealers Ford are adding this year are in smaller inland cities.
“The impact on Ford China will not be major as our sales and network growth going forward will be driven by second and third tier cities,” it said in a statement.
For Korea’s Hyundai Motor, which broke ground for its third plant in Beijing just last month, the impact will also be limited as more than 80 percent of its sales come outside the capital city, a spokeswoman with its China car venture said. Shares in Hyundai slid 2.2 percent in Seoul.
The lack of clarity on the size of the central government’s fleet, at least 15 percent of vehicles on Beijing roads based on conservative Chinese media estimates, called into question the quota’s usefulness and prompted complaints about bureaucratic impunity.
The number of vehicles in Beijing registered to the central government is not officially reported, and the new rules only stipulate that city government agencies will not be permitted to buy new vehicles in the next five years.
Ye Xiaojing, a legal assistant with a Beijing law firm, made a rare public call for accountability this week via the official Xinhua news agency for the government to reveal the size of its vehicle fleet.
“The government has so many restrictions on private car owners. Should we have similar supervision on cars owned by the government? If we do not know the current number, how can we know it is not increasing?” Ye told Reuters.
Black government-plated sedans with tinted windows racing through red lights and disobeying all manner of road rules, often under the noses of the police, have become a common cause of public griping over the past few years.
Chinese Internet users were quick to denounce the new rules as unfair and ineffective.
“In the end, all the people on the road will be those who have money, power and connections. Limiting purchases is unfair ... and it takes away the people’s right to purchase,” wrote one blogger on the popular Chinese Internet portal Sina.com.
Audi, a favorite car brand of many senior Chinese government officials and gets roughly a fifth of its China sales annually, was not immediately available for comment. BMW and Daimler’s Mercedes-Benz said they were evaluating the impact.
