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November 17, 2013

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Ceiling brings city plate prices down 9.6%

THE price of a Shanghai car plate dropped nearly 10 percent yesterday, as the price ceiling mechanism again worked its magic.

The average winning bid of a Shanghai license plate dropped to 75,717 yuan (US$12,425), down 8,006 yuan, or 9.6 percent, from last month.

The lowest winning bid fell 6,800 yuan to 75,500 yuan, according to auction organizer,  the Shanghai International Commodity Auction Co.

A month after its removal, the upward limit for first-round bids was brought back after a 14 percent price increase in October.

The price ceiling comes into force only after a price hike of more than 3 percent.

Under a first-round bid ceiling of 74,900 yuan — the weighted average of average prices in September, August and July — prices stabilized at a little above the ceiling price yesterday.

Bidders use the ceiling as a gauge for second-round bids.

Price trends followed a similar pattern in recent months when the ceiling was standard.

Following the introduction of the ceiling in April, the average price for a Shanghai car plate dropped from a record high of more than 90,000 yuan in March to 73,492 yuan in September.

Eddie Zhang, a Shanghai car dealer, said the price ceiling is a strong factor in forming expectations of market downturn.

Though yesterday’s auction had just 8,500 car plates — 500 less than usual and 1,500 down from last month’s supply — the number of bidders increased by 32 percent to 38,220.

“People were looking to get a bargain as the price ceiling was brought back,” said Zhang. “The trend is largely a reflection of bidders’ expectations.”

The more bidders get to know how the ceiling works, the longer the price may hover around a stable low level, he added.

Last month, the city government, determined to curb market hype through market forces, suspended the bidding limit. But a price increase of between 3 and 6 percent leads to a price ceiling being imposed the following month, while a spike of more than 6 percent results in a two-month imposition.

As October’s hike was 14 percent, next month’s auction will still have a price ceiling of 73,492 yuan.

Meanwhile, officials have said that rules for cars with out-of-town plates using local elevated highways during peak hours will remain unchanged.

The police authority dismissed rumors that cars with out-of-town plates would only be allowed on highways between 8pm and 7am on weekdays.


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