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February 16, 2014

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More bidders, fewer plates, but prices fall

SHANGHAI car plate prices continued to drop yesterday, even with the supply at a 22-month low and the number of bidders at its highest level in nearly six years.

A total of 8,000 car plates were made available for auction this month, out of an annual quota of 100,000 set by the city government in December.

Under the plan, in January, April and September, 9,000 car plates are made available to meet holiday demand, while for the remainder of the year 8,000 plates will be auctioned each month.

Among this month’s supply, 7,400 plates were for individual bidders — 700 less than for last month — while the number for organizations was cut by 300 to 600.

Separate auction sessions were introduced for individual and business buyers in January as organizations are considered less price-sensitive in their bidding.

At yesterday’s session for private car owners, the average price of a Shanghai license plate went down 144 yuan — 0.2 percent — to 73,357 yuan (US$12,089).

The lowest winning bid fell 300 yuan, 0.4 percent, to 73,200 yuan, the Shanghai International Commodity Auction Co said.

First-round bids were again subject to a 72,600 yuan price ceiling, which proved effective in stabilizing prices last month when there was a surge in bidders, a hike linked to the Chinese New Year shopping frenzy.

The number of bidders went even higher this month — to 45,758 from 41,946 in January.

Eddie Zhang, a car dealer in Shanghai, said part of the high demand for car plates was from  bidders who lost out last time.

Recent price trends shows a new price ceiling mechanism introduced in January is really working, added Zhang.

Throughout 2014, the upward limit for first-round bids will be 72,600 yuan. This replaces a variable ceiling — and the removal of the ceiling briefly last year — that brought price fluctuations.

First-round bids serve as the gauge for subsequent rounds, so the mechanism can help stabilize the average winning bid to little above the ceiling.

The auction for organizations has no price ceiling, but with this month’s average winning price for private car owners as its floor price.


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