Prospective cars owners in Shanghai will be allowed to tender three times for license plates in the city's unique auction system under a new rule issued on Monday.
China's business hub was the only city in the country to use an auction to control plate supply. Previously, only one bid was allowed.
Under the new regulation, where bidders can now know rival bids, prospective car owners would be provided with updates on the lowest winning tender. They would be allowed to change their original price twice within 30 minutes after their first bid.
The price adjustments would be capped to a range of 600 yuan (about 80 U.S. dollars) to prevent sharp increases.
Wu Yi, deputy director of the transportation bureau, said at a press conference on Monday that since the auction system was implemented in 1994, about 1.5 million cars had been kept off the roads. This had helped to maintain air quality and reduced traffic.
Auto industry analysts said the judgement was made in comparison with Beijing, a city that had no car plate auction system. By the end of 2006, the capital had 1.81 million private cars. In comparison, the Shanghai auction system had capped the number of private cars at 509,400.
However, the auction had come under attack since its debut. Some citizens dodged the system by obtaining plates from other cities. Wu said his bureau didn't have statistics for those types of car.
Some law experts had even criticized the Shanghai government had transgressed the country's road traffic safety law.
Wu noted the limited number of plates auctioned off each time created anxiety among those eager to buy a car.
In general, the average winning tender had been well above 40,000 yuan, and rose to above 50,000 yuan in the fourth quarter of 2007. Last month, the highest bid peaked at a record 56,042 yuan.
Shanghai released 77,500 car plates for auction in 2007, generating total revenue of more than 3.7 billion yuan.
Bidding for the first allotment of private license plates in 2008 is Saturday, when 16,000 plates are being offered. This was up from the 7,500 sold during the last round.