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June 27, 2016

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Home » Business » Autotalk Special

Owning a car in China is getting harder and harder

LIKE the legendary ruler Yu the Great, who tamed raging floodwaters, Chinese officials are seeking to harness the flood of private cars on urban streets.

Yu’s wisdom in channeling floodwaters instead of trying to block them may hold lessons for modern Chinese authorities. Efforts to restrict vehicle registration and use in Beijing and Shanghai have been met by public outcry. Is it better to fight a tide or dance with it?

Earlier this month, Beijing said loudly and clearly that it will start charging congestion fees, a plan it has been mulling for quite a while. The proposal is now in draft form. Nowadays, driving a private car in the capital is a privilege for those lucky enough to win a car plate in the local lottery, where the success rate is currently lower than 1 percent. In the future, the privilege will be reserved for those rich enough to pay extra for using roads. The size of the fee is still pending.

In Shanghai, where local car plates are meted out through auctions at prices of more than 84,000 yuan (US$12,704), bidders will be subject to new restrictions. Starting next month, those who already have a Shanghai car plate won’t be allowed to renew their eligibility to participate in auctions.

In fact, eligibility rules for everyone are changing. To participate in auctions, bidders who don’t have Shanghai permanent residency, or hukou, will be required to show proof of residency, and an active social security account or personal tax payments in the city for the past three years. That’s two years less than similar criteria in Beijing.

And for the first time, a relatively clean driving record is mandated. For Shanghai car plate auctions, bidders must have no more than five traffic infringements or 12 penalty points in one year, let alone revocation or suspension of a driver’s license or detention related to serious accidents.

Authorities defended the more stringent threshold for participating in auctions as a last resort in efforts to control the rampant growth in the car population.

In Beijing, where cars with out-of-town plates are heavily restricted, the number of locally registered cars grew 1.5 times from 2004 to 2015, to over 5 million vehicles. In that same period, roads for driving expanded by only 58 percent.

In Shanghai, one-third of its more than 4 million cars are registered outside the city as car owners circumvent the local car plate quota. But nowadays, cars with out-of-town plates are more restricted in access to elevated ring roads, and limits on where and when they can drive are expanding.

Never before, since China’s 20-year leapfrog from a country of bicyclists to the world’s largest car market, has the privilege of private car ownership become so onerous.

Motorists have been adept, so far, in finding inventive ways around the rules. The market has no shortage of ingenious back doors. A common solution is to technically borrow someone else’s unused car plate under a “gentleman’s agreement,” then drive on that while waiting for one’s luck to change in auctions or lotteries.

Jason Guo, a young financial professional in Beijing, is lucky enough to have found a friend with a spare plate. That will allow Guo to drive his Lexus IS. He will pay his friend 1,000 yuan a month for the privilege, which is cheaper than doing a similar deal through a broker.

“I can barely afford it, even before the new congestion fee is imposed,” Guo said, adding with a laugh, “but I’m looking on the bright side. I still have a kidney for sale.”

Zhang Gen, director of urban design at the Beijing Institute of Architectural Design, said the proposed congestion fee in Beijing is an economic lever unlikely to work. The solution is really just a drop in the ocean that benefits the wealthy who can afford the fee, he said. Private car owners won’t consider driving less until public transport systems are more convenient.

In Shanghai, people whose face disqualification in car plate auction are making desperate last attempts to improve their odds. Some hire professional proxy agents, whose service fees have been averaging 20,000 yuan since the more restrictive bidding qualification system was announced.

One way out of this quandary is to buy an electric car. As part of government efforts to clean up the air, green vehicles come with the promise of semi-automatic free car plates in Shanghai and Beijing.

However, even that channel has some roadblocks. Car plates for electric and certain hybrid vehicles are available only to motorists who have access to charging facilities. It is not yet clear whether Beijing will slap its congestion fee on new energy cars.

Shen Xinhua, a persistent loser at Shanghai auctions for 20 straight months, says he will give it another try before seriously thinking about buying an electric car.

“There is no electric car as big as I want,” he said. “And it’s not clear what happens to a green plate when you eventually buy another car. Policies can change.”

Shanghai traffic authorities are coy about whether the existing quota system for green car plates will continue if electric car sales take off and incentives aren’t needed anymore. Green cars may help air quality but they don’t solve the traffic congestion problem.

It’s hard to draw the line where the public’s right to drive ends and its responsibility for bad air and traffic gridlock begins.

Guangzhou, the capital of Guangdong Province, recently began offering 2.1 million yuan for members of the public who suggest creative solutions to the traffic nightmare. The southern city uses both auctions and lotteries to limit distribution of local car plates, but traffic congestion is getting worse.

Without restrictions on vehicle use and registration, Beijing and Shanghai might lapse into chaos. The actions to-date are band-aids that make everyone feel that something is being done, but traffic in big cities will need serious surgery to overcome the pain of too many cars on the road. There is no shortage of innovative ideas on how to ease the pain without killing the patient.

The central government has proposed that closed apartment complexes open up throughways to increase capillary roads in big cities, though the idea has met resistance from those communities. And carmakers are teaming up with car-sharing operators to give people an alternative to mass transit without having to give up the experience of motoring. That includes car-for-hire and ride-sharing programs like Uber and Didi .

“Instead of selling cars by the number, we will be looking at selling them by vehicle miles,” Michael Ableson, vice president for strategy and global portfolio planning at General Motors said of a partnership the company has with US car-for-hire operator Lyft.

Together they have developed a flexible rental plan to give Lyft drivers access to GM-made cars at affordable prices.

Earlier this month, Volkswagen became the latest International carmaker to bet on on-demand mobility services. It teamed up with influential European car-sharing player Gett. Neither GM-Lyft or VW-Gett has direct involvement in China’s current car-sharing economy, which is dominated by domestic operators Didi and Yidao.

General Motors said an ideal pattern for environmental use of vehicles would be a combination of car sharing and vehicle electrification, as well as autonomous driving and Internet connected autos.

More than 30 percent of traffic in big Chinese cities is generated by futile searches for parking spots, according to Chinese Internet company Baidu. That is one goal of cars becoming autonomous — to find spots and even park itself.Since full artificial intelligence is still faraway, some human help could ease the problem. Ahead of the Mobile World Congress that opens this week in Shanghai, Ford launched an Internet-assisted trial parking program in Shanghai for its employees. It allows users to call for valet services to park cars or to remotely check on the availability of nearby parking spots and “unlock” no-parking barriers via a smartphone or Ford’s SYNC in-vehicle infotainment system.

“Parking is a nightmare, especially in China,” Ford said, after conducting a survey of traffic problems in the Asia-Pacific. “One-fourth of Chinese respondents hold parking responsible for the deterioration of traffic flow. But Chinese consumers are more open to new technologies as solutions.”

Hopefully, that’s the light at the end of the tunnel.


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