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Price ceiling ordered for car plate auctions

By Shi Yingying in Shanghai  (China Daily)

08:39, April 11, 2013

A price ceiling will be applied at Shanghai's monthly car plate auction for the first time as part of the local government's efforts to cool the market.

The move comes with the average successful bid at last month's auction reaching just over 90,000 yuan ($14,530).

Bids of more than 83,600 yuan won't be accepted by the online auction system during the first round of bidding, the local authority said on Monday. This month's auction is on April 20.

"The ceiling price is the weighted average price for this January, February and March's average for successful bids," said Huang Xiaoyong, an official with the Shanghai Municipal Transport and Port Authority's cooperation office.

Asked whether the same cap will apply to the May and June auctions, Huang said the authority will evaluate April's ceiling-price trial and "further optimize the auction process".

Zhang Xingliang, from Shanghai who failed to win a car plate in the February and March auctions despite gathering a dozen friends for last month's auction to help him bid for a plate, said he isn't sure that such a policy can bring the price down.

"The ceiling price only limits the offer to the first round. You never know what's going to happen during the second and third rounds," said Zhang, adding that everybody expected last month's price to fall after the local government introduced policies to regulate the market, but it didn't.

"Rules ... have been changing from time to time and even the most experienced bidders aren't sure about April's auction price," he said.

The city government said nine days before the car plate auction on March 23 that the price of a secondhand car plate should not exceed the auction price of new car plates. It blamed the rising price of secondhand plates for pushing up the new-plate prices.

But the average successful bid soared to 91,898 yuan last month despite the regulation and three other measures to combat speculators.

Chen Ji, 28, said she won a plate at March's auction by ignoring the system's "stupid reminder" to offer a rational bid, because "there's no way that I could have won the plate if I had followed that reminder".

Shanghai will also increase the number of car plates offered at the upcoming auction by 2,000, to 11,000.

A new regulation, which states that secondhand cars with Shanghai plates cannot be resold within a year, will take effect on April 20 to help curb surging plate prices.

A similar policy was launched in July and extended the period in which motorists must keep license plates for new cars before reselling them from one to three years.

But such a regulation didn't work because "it has loopholes that scalpers can take advantage of", according to Zhou Wenchao, a salesman at a Shanghai car dealership.

"A plate cannot be resold when it's attached to a new car, but scalpers can arrange for it to go on a secondhand car, making a resale possible," said Zhou.

On the policy of reserving new car plates for new cars only, Zhou said there is concern that the price for secondhand plates will rise, as owners of secondhand cars will be forced to resort to the black market.

But Lin Huaibin, auto analyst with HIS Automotive, disagreed and had faith in the new policy of reserving new- car plates for new cars.

Zeng Zhiling, director of Asia Pacific forecasting with LMC Automotive, said for most Shanghai residents, buying a car plate has become a form of investment rather than buying a permit to drive.

"It's like investing in stocks or the gold market as everybody believes the price will keep going up. That's why they're stormed into auctions regardless of the cost," he said. "None of the new policies will work if we can't change the masses' wrong expectations."

Zeng said the solution is to announce that the car plate can't be resold, but said the government will not go for this as it needs the money from the auction as part of its income.

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