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People's Daily Online>>China Business

Car dealers forced to find new strategies

By Li Fangfang (China Daily)

13:48, December 24, 2011

A lottery drawing for car license plates in March in Beijing. The odds against winning the right to register a vehicle in that drawing were 23 to 1. (Xinhua Photo)

BEIJING, Dec. 24 (Xinhuanet) -- Despite the benefits Beijing's license plate quotas may have had on the city's troubled traffic situation, it stunted local car sales and forced automobile dealers to change their business strategies.

According to Su Hui, an official with the China Automobile Dealers Association, whole year sales of new vehicles are expected to plummet from last year's 890,000 units to 400,000 for 2011.

Beijing adopted a policy a year ago to cut down city traffic by limiting the amount of new license plates. Since January, new license plates are issued through a lottery system.

"Hampered by the lucky-draw policy, Beijing sold 355,000 vehicles in the first 11 months, a sharp, 53 percent decline from a year earlier. And the downturn will get worse in December," said Su. "Even the still-booming luxury car segment slowed year-on-year from 80 percent before August to about 40 percent now."

"The restriction has been the key killer of Beijing's automobile market in 2011," he said.

Though the frigid market put some Beijing automobile dealers in hot water, some even closing their businesses, Luo Lei, also of the China Automobile Dealers Association, said that the strict measure also helped local dealers to restructure their businesses and adjust the strategy.

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