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August 7, 2013

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City uses market forces to curb car plate prices

SHANGHAI has announced new rules for car plate bidding - honoring a commitment to use market forces to curb prices.

Starting at this month’s auction - featuring the usual figure of 9,000 plates - bidding will be condensed from one and a half hours to an hour.

And from October, a price ceiling introduced for first round bidding in April will only be triggered by steep price hikes.

Under the formula, a car plate price increase of between 3 and 6 percent at auction will result in a price ceiling being placed on the first 30 minutes of the following month’s bidding.

An increase of more than 6 percent will result in the ceiling being imposed for two months.

Ceilings will be based on the average winning bids in the three months before the price spike.

During the transition period, the auction will continue to follow existing price ceiling protocols.

This month’s first-round bids will have a ceiling of 74,100 yuan (US$12,049) Ñ based on average prices from last September to March.

It is down 1,300 yuan from last month’s ceiling. This could further cool the market as Shanghai car plate prices have fallen for four straight months Ñ down 15,000 yuan to around 76,000 yuan Ñ since the introduction of the price ceiling and its steady reduction.

Another factor is a new rule introduced in March prohibiting a second-hand car plate to be sold for more than the latest average price for a new one. The second-hand market provides a reference point influencing trends for the auction.

The government said the next step is a car plate information system that includes second-hand car plate trading in the bidding system for new ones.

This will make it even harder for scalpers to cash in.



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