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Shanghai's October car plate auction bid drops to 4.5%

By Anna Lu | October 24, 2015, Saturday | Online Edition

THE success rate of Shanghai's monthly car plate auction fell back to 4.5 percent today, the same level as in August, as participation rose despite a drop in supply. 

It had touched 5.3 percent in September. 

A total of 7,763 car plates were up for grabs for individual buyers today, down 964 from September. However, the number of bidders were up by 5,230 -- to 170,995.

Following the rise of the price ceiling for the first-round bids by 2,700 yuan to 82,600 yuan, the lowest winning bid moved up 3,200 yuan to 85,300 yuan, while the average winning price rose 3,252 yuan to 85,424 yuan.

This is the fourth quarterly upward adjustment of the upward limit for first-round bids this year. The price ceiling mechanism, based on the average of monthly average winning prices from the last quarter, works as a price trend indicator and also setter. 

"The auction price increase has formed a pattern following the pace of the price ceiling moving up and up," said Eddie Zhang, a car dealer in Shanghai.

He said changes in supply and demand are by comparison only minor factors in the price trend considering how the auction really work.

It is as ambiguous as a lucky draw as there is little room for free price proposals.

The whole point of the first round of bidding is making a bid as high as the upward limit to qualify into the next round. In the second round, when only two price increases can be made, and only no higher than 300 yuan based on the real-time average of the market, it all comes down to guessing.

The lowest winning bid is often finalized seconds before the closing of the auction as everyone tends to wait till the end, after everyone else makes their move, to place the final bet. Today, the lowest-priced deals were cut eight seconds before the end. That's usually when a spike in traffic data leads to serious congestion which only a minority group of people can beat to submit their prices successfully. 

A popular strategy is to "ambush", guessing a price and a timing to submit it instead of following the market pulse and being calculative. 

Whoever does the math and then looks closely into this rule will find out this auction is by nature a hopeless spin on his wheels of fortune unless he seeks some technological help. 

Lisa Hu, who failed for the fourteenth consecutive month to get a car plate today, sees no point in simply waiting for her luck to come in due time based on the odds. She said she has decided to hire proxy services for car plate bidding next month.

Proxy services are known for using high-speed internet connection as well as intelligent softwares to increase their chance of winning, which is claimed to be as high as 50 percent, worth paying about 15,000 yuan as service fees upon delivery.

"On the thought of the car plate's price increase month by month, it doesn't bother me any more that this kind of service will cost me extra," said Hu.

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