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License plate cost still high despite new policy

By Shi Yingying (China Daily)

08:34, July 23, 2012

The cost of a license plate in Shanghai, China's most expensive, did not fall as expected in July's auction despite a new policy the municipality introduced to rein in price speculation.

That policy extends the period motorists must keep license plates before reselling them, taking it from one to three years.

The new rule, which took effect on Saturday, the day of July's auction, is expected to deter scalpers from reselling.

However, the average price paid for a license plate was almost unchanged from last month. With 7 percent (1,752) more people participating in Saturday's auction - 26,526 in all, the highest number in recent years - competition was fierce at almost three bidders per plate.

According to the Shanghai Commodity International Auction Co, the average price of a Shanghai license plate in July was 58,271 yuan ($9,140), 44 yuan more than last month.

"The new policy attaches the fixed-term of three years to the license plate, which means you cannot buy it as the gift for your friend," said Zhou Wenchao, a salesman at a Shanghai car dealership.

Zhou said that although the new policy's longer wait before resale is supposed to deter speculators, it has loopholes scalpers can take advantage of.

"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. Everybody expected July to be the cheapest month for the plates (because of the new policy), but it didn't happen. That loophole could explain why this month's auction in fact attracted more bidders," said Zhou, whose job includes helping some clients get license plates in the auction.

Speaking on condition of anonymity, a scalper said the new policy could raise the price of secondhand license plates on the black market because there is no time limit on when you can transfer plates attached to secondhand cars.

"It's possible to attach a new plate to a secondhand car registered in my name, transfer the car and plate to the buyer and then take the plate off the car after the transaction," he said.

The prices of the city's license plate soared to more than 64,367 yuan in May, a record high. Auction records have been broken more than 10 times since the beginning of last year, and the average cost of a license plate price has increased by more than 2,000 yuan every month - except in June and July - since the beginning of this year. Last month, Shanghai authorities adopted a policy that increased the quota of license plates by 200 to 9,500, driving down the average winning bid for a plate to a three-month low of 58,227 yuan. The larger quota remained in force this month.

"But even though the supply is higher, the demand is even more. I don't think it will ease the struggle for plates in the long run, given that June was only the first month with 9,500 plates," said Yang Zhonghang, 24, who works for a foreign company in Shanghai and plans to buy a new car and license plate.

Yang Xiaoguang, dean of traffic engineering at Tongji University, said introducing new policies and auctioning license plates will not solve urban traffic troubles in the long run.

"The only solution is to develop high-quality public transport," Yang said. The policies are merely "emergency measures that cure the symptoms, not the disease".
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