Those who want to have their own car in Beijing need lots of good luck because there is a lottery for license plates and only the winners will get a purchase permit. The city introduced the system in 2011 to curb worsening traffic congestion and air pollution. Currently, the annual quota for gasoline-powered cars is 40,000, with 38,000 reserved for individual applicants. But the number of applications has already exceeded 3.2 million, according to latest official figures.

There is a quota system for new-energy vehicle (NEV) buyers, too. According to Beijing's traffic management authorities, the quota for individual owners in 2019—54,000—has already been used up. Current new applicants will only get their license by 2027.

Beijing is not the only locality in China to have restrictions on car purchasing. Seven other cities, including Shanghai, Guangzhou and Shenzhen, and the southern province of Hainan have also implemented such a policy. However, a newly released guidance document may change the situation.

On June 3, the National Development and Reform Commission (NDRC), the Ministry of Ecology and Environment and the Ministry of Commerce jointly issued a guideline on boosting the consumption of some key consumer goods. Local governments are barred from introducing new restrictions on automobile purchasing, according to the document. It also requires lifting all limits on the consumption and use of NEVs across the country, giving support to the first NEV purchase by car-free families and reducing parking fees for NEVs.

Xu Changming, Deputy Director of the State Information Center, said the policy will help boost sales of passenger cars. "Its main objective is to promote the upgrading of automobile consumption and the industry," Xu added.

Industry analysts believe that the time is ripe for scrapping traffic limits and purchase restrictions on NEVs. They predict that the elimination of restrictions on NEV purchase, in particular, will re-energize the automobile market and turn the downward trend around.

Pros and cons

China's NEV market has stayed robust during the recent years in contrast to the cooling trend in automobile consumption. While automobile production and sales showed a 13-percent decrease year on year in the first five months this year, NEV production and sales increased by 46 percent and 41.5 percent year on year, respectively, according to the China Association of Automobile Manufacturers.

As their output increases, some domestic NEV brands' performance indexes, such as battery capacity, have optimized remarkably, strengthening consumers' confidence. Easing the limits can greatly unleash the consumption potential.

Also, as the government subsidies for the purchase of clean-energy vehicles are reduced this year and will be completely canceled by 2020, the increased sales will not cause much financial burden for the government.

More importantly, the new policy is conducive to transforming the automobile industry by expanding the NEV sector further.

Cheng Shidong, a researcher with the NDRC's Institute of Comprehensive Transportation, said the new policy will, to some extent, spur the NEV market. The effect will be more obvious in large cities like Beijing and Shanghai. But the more positive aspect is that it will encourage local governments to come up with more effective traffic policies instead of relying on administrative measures to curb a high volume of vehicle purchase to alleviate traffic congestion.

"It will push local governments to spend more effort and money on improving the urban transportation system," he said, emphasizing that a market-based mechanism should be used to regulate the use of passenger cars.

However, some people argue that the elimination of restrictions on NEV purchase and use will have only a minor impact on reviving the automobile market. CITIC Securities, a Beijing-based investment bank, said the recent adjustment will boost sales in the short run, but after the purchase subsidies are scrapped, the growth of NEV sales will slow down and the effect of the policy stimulus will diminish. The market will be the driving force in the long run.

Moreover, the process and methods of lifting the restrictions will vary in different places, Xu said. So it remains to be seen if a short-term stimulant can re-energize the automobile market.

Large cities' goal

Guangzhou and Shenzhen, two cities in south China's Guangdong Province, announced on June 2 that they will increase passenger car quotas by 100,000 and 80,000, respectively, by December 2020. The news has aroused speculation about what Beijing and Shanghai will do. The four megacities are commonly known as China's first-tier metropolises. However, till now, Beijing and Shanghai have not made any announcement.

"Beijing is unlikely to completely open access for NEV purchase with the traffic pressure in the city being a long-time issue," Kang Liping, a project manager with the Innovation Center for Energy and Transportation, a Beijing-based think tank in the area of clean transportation, said. "But the restrictions can be unbundled, such as increasing the annual quota for NEV license plates and giving preference to families that do not own a car over families that already have a car while allocating the plates. This will not only solve the problem of car-free families, but also optimize the consumption structure."

Xu said while eliminating traffic and vehicle purchase restrictions is a target for large cities to pursue, due to the different situations in different areas, there will be differences in the progress and the method. However, traffic congestion is a common issue all cities face.

In addition, it is also worth considering if it is feasible to have exclusive parking lots for NEVs with charging facilities.

Chen Yanyan, head of the College of Metropolitan Transportation, Beijing University of Technology, gave her suggestions for reducing traffic congestion. She said city governments could collect congestion surcharges from vehicles that drive to specific busy areas and raise parking fees at the core areas of the city. This could lead to the owners cutting down on frequent use of their own cars.

She also said megacities that have traffic jam issues will face difficulties soon after the restrictions are scrapped. Hence, they should mull measures to increase public transportation, optimize the traveling structure and encourage residents to reduce their dependence on driving their own vehicles.

"Limiting passenger car purchases should not be used as a long-term and fundamental measure for urban traffic management," Cheng said, adding that governments at all levels should come up with appropriate transportation plans and encourage the public to choose green traveling.

To better implement the new policy on easing the restrictions on NEV purchase and use, local governments should improve related policies, enhance their management capacity and coordinate among automobile production, sale and management, Tan Haojun, a researcher with the China Non-Performing Loan Industry Alliance, a business information provider, wrote in an essay.

He emphasized that it is essential for automobile manufacturers to learn how to adapt to the changing needs of consumers, improve the quality of their products, and provide good after-sales services. To tap the potential of NEVs, they should develop new and high-quality products, which is of paramount importance for future automobile consumption.

Copyedited by Sudeshna Sarkar

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