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May 26, 2013

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Plate prices fall for 2nd month as curbs bite

SHANGHAI car plate prices dropped for the second consecutive month at yesterday's auction, as speculation continued to ebb following the implementation of a series of curbing measures.

The average successful bid for a Shanghai car plate fell to 80,803 yuan (US$13,178), down 3,298 yuan from last month, while the lowest price shed 3,200 yuan to 80,700 yuan, according to Shanghai International Commodity Auction Co.

In both cases, that means a more than 10,000 yuan nosedive from two months ago, when the prices exceeded the 90,000 yuan benchmark for the first time.

At that time they had soared 32.5 percent in just three months - more than for the whole of last year.

The reverse of this steep upward trajectory came after the municipal government introduced a price ceiling for the car plate auction.

It also cracked down on speculative second-hand car plate trading, which provides a reference point influencing trends for new plates.

Bids higher than the weighted average price of the average successful price from last December to March were rejected in the first round of yesterday's auction.

The upper limit was set at 79,900 yuan, down 3,700 yuan from the level of April.

"The new bidding policy seems quite effective in preventing overbidding, which was one of the key drivers of previous price hikes," said Eddie Zhang, a car dealer in Shanghai.

He noted that the atmosphere at the auction was less tense than usual.

This month also saw a decrease in the car plate supply, reduced from 11,000 in April to 9,000.

The number of bidders dropped 3,950 to 22,224.

Lynn Wang, a would-be car buyer who has been taking a wait-and-see approach to the auction, said she is thinking of trying her luck in the upcoming months.

"I was planning to get an out-of-town license plate because the local one would cost too much," Wang said.

"But now that the price has dropped in the past two months, I think there's a chance for me to get a bargain this year."

Zhang said though it will take some time to confirm the car plate price downward trend, there is not likely to be a big reverse as the city government is determined to bring the price back to more normal levels.

In March, Vice Mayor Jiang Ping outlined three back-up plans, should existing curbing measures fail to make an impact.

The new policies available for roll-out, if required, include: organizing separate auctions for private and corporate bidders, as the latter are less price-sensitive; reserving new car plates for new cars only; and including second-hand car plate trading in the bidding system for new ones.

The last two measures are intended to make it harder for scalpers to cash in.


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