With most license-plate lotteries vastly oversubscribed, the hundreds of thousands of Beijingers hoping to one day own a car have suddenly found their dream is out of reach. Meanwhile, many small automobile dealerships have gone bust – some estimates suggest as many as half in the past 18 months – and selling second-hand cars privately has become all but impossible.
Although the economic damage to small dealerships is reportedly substantial, big manufacturers such as General Motors and domestic brands like Geely are now targeting smaller cities where there are no license plate auctions – and with some success – providing the stalling economy with a jump-start but spreading traffic problems beyond the likes of Beijing.
After growth in light vehicle sales slowed to 4.6 percent in China last year following license plate caps, a strong rebound to nearly 9 percent growth – about 19.5 million new cars – is forecast this year, according to analysts LMC Automotive, and carmakers are breaking records.
“This is the third time in GM’s history in China and the earliest ever that it sold two million vehicles in a calendar year,” the U.S. automaker, the largest by sales volume in China, announced after it reached its latest milestone on September 21.
The replacement of old, smog-emitting vehicles with newer, cleaner ones is the only apparent upside in terms of the environment and health concerns. But here too the outlook is gloomy.
This year, the U.S. Embassy in Beijing has recorded ever higher readings of particulate matter of 2.5 micrometers in diameter linked to lung and heart diseases. The World Health Organization has ranked Beijing as the 10th most polluted capital in the world and the fifth worst city in China. But critics argue that the WHO calculated using China’s official statistics and that U.S. readings have tended to be higher meaning Beijing is likely to compare even less favorably.
Lanzhou, capital of northern Gansu Province, was reported as the most polluted city in the country while Shanghai, which introduced car license lotteries in 1994, surprisingly ranked among the top ten cleanest.
After Beijing authorities announced that tackling pollution would be its number-one priority for 2012, even the China Daily – which typically tows the party line – said “the city is embarrassingly unprepared for such a challenge.”
In response to a lack of demand for cleaner electric and hybrid vehicles – despite subsidies – the government has exempted them from license plate lotteries in Beijing as thousands of civil servants are set to test drive electric vehicles in the capital over the next year.
Meanwhile, Beijing continues to build new subway stations at a mind-boggling rate with a host of new line extensions set to open by the end of next year and many more by 2020.
Beijing authorities are also attempting to encourage citizens to fall back in love with the bicycle. During much of the 1980’s 80 percent of Beijingers rode bicycles regularly. By 2010 that number had plummeted to less than 20 percent. The government has since announced plans to lift this figure to 23 percent by 2015 by installing public bike stations—where citizens can rent bicycles—throughout the city.
The main problem though is that Chinese consumers want to buy cars – big, expensive ones which reflect their growing economic status, according to Pike Research, a specialist in clean energy transport policy.
“Many members of the emerging middle and upper classes prefer imported vehicles with nameplates from the United States and Germany,” said Research Director John Gartner. “Especially larger sedans in which owners can sit comfortably while their drivers navigate China’s often congested roads.”
Steve Finch is a freelance journalist based in Bangkok. His work has appeared in the Washington Post, Foreign Policy, TIME, The Independent, Toronto Star and Bangkok Post among others.