SHANGHAI—In another sign of harder times for the automotive industry in China, the affluent southern Chinese city of Shenzhen has joined other major urban centers in restricting consumer car purchases.
Starting this week, consumers in Shenzhen need a city permit to buy a car, according to a statement posted Monday on the city’s website. In a separate statement, authorities said only cars with Shenzhen license plates will have access to central parts of the southern metropolis during peak traffic hours.
The Shenzhen government will issue 100,000 car-purchase permits a year, including 20,000 for electric cars, the statement said, adding that permits can be obtained either through a lottery system or an auction. Analysts estimate that about 250,000 new cars were sold in Shenzhen this year.
Analysts said the impact of Shenzhen’s move on car sales will likely be modest but it could affect consumer psychology more broadly and intensify pressure on local car brands.
“Shenzhen is a city of young migrants who don’t earn high salaries so many look for cheaper, Chinese car brands,” said Yale Zhang, managing director of Automotive Foresight, a Shanghai-based research firm.
Growth in Chinese new-car sales slowed to its lowest level in almost two years in November as the overall economy continued to slow. Passenger-car sales for the month rose 4.7% from a year earlier to about 1.8 million vehicles.
In Shenzhen, current drivers who want to replace their cars won’t be affected because they already have license plates.
Research firm JL Warren Capital estimates the upgrade car market in the city to be about a quarter of a million vehicles.
“There will be more cities that will see auto-purchase restrictions in 2015,” said Junheng Li, head of research at the firm.
Similar restrictions are already in place in Shanghai, Beijing and Guangzhou—which like Shenzhen are considered tier-one cities economically in China—as well as in such lower-tier cities as Tianjin, Guiyang, Shijiazhuang and Hangzhou.
Automotive Foresight’s Mr. Zhang said Shenzhen’s limits could have a strong psychological effect. “Consumers in nearby cities and other large cities will start to panic purchase in the first and second quarters of 2015,” he said.
When the northern city of Tianjin announced its measures last year, thousands of residents rushed out to buy cars, with some even using gold necklaces as collateral.
Shenzhen is home to Warren Buffett -backed BYD Co. , whose Hong Kong-listed shares plunged almost 50% earlier in December before climbing back. The company, whose car lineup includes electric vehicles, has said it wasn’t aware of a business-related reason for the drop.
Macquarie Research analyst Zhixuan Lin said Monday’s announcement could hit BYD’s sales of conventional cars more than other car makers. He said scarce license plates could see buyers shift purchase to higher-end cars, benefiting makers of luxury and sport-utility vehicles.
“The flip side is that the Shenzhen government will allocate 20,000 number plates for new-energy vehicles, which should benefit BYD,” he said.
BYD didn’t respond immediately to requests for comment Tuesday.
Separately, the Chinese government said Tuesday it will continue to subsidize buyers of electric vehicles and plug-in hybrids until 2020. The current subsidy program, designed to help the environment and foster local innovation, will expire next year.
The Ministry of Finance said on its website that buyers of electric cars will receive a subsidy of as much as 55,000 yuan ($8,842) in 2016 while buyers of plug-in hybrids will get as much as 32,000 yuan. Subsidies will fall in later years. Currently, electric-car subsidies run up to 57,000 yuan, while those for plug-in hybrids can reach 33,250 yuan.
In the first eleven months of this year, 29,060 electric vehicles and 23,884 plug-in hybrids were sold in China, according to the China Association of Automobile Manufacturers. The sales tally for 2013 was 14,604 electric vehicles and 3,038 plug-in hybrids.
In spite of the sharp increase, China is still far short of its goal of having 500,000 hybrid and electric cars on its roads by 2015 and five million by 2020.
Google’s Brin: Individual car ownership needs to go
By Chris Matyszczy July 6, 2014
The people who are changing the world aren’t going to wait for you.
It’s your job to understand what they’re doing and either approve of it or accept it.
Most people, of course, can’t be bothered to see where the world is going. They’re too wrapped up in their daily needs and lacks.
However, an interview given by Google co-founders Larry Page and Sergey Brin to VC Vinod Khosla offered a clear picture their company’s destination.
Page and Brin see a world in which much needs fixing. Theirs is a company that works on a broad number of fronts in the hope that just a few will be world-changing winners.
You might have thought that this was just an engineer’s wheeze, something that faces vast obstacles in the real world. However, Brin would like you to know just how serious he is.
“I hope that that could really transform transportation around the world, and reduce the need for individual car ownership, the need for parking, road congestion and so forth,” said Brin.
Ownership of cars is, in essence, inefficient.
Brin described the future like this: “With self-driving cars, you don’t really need much in the way of parking, because you don’t need one car per person. They just come and get you when you need them. You can also make much more efficient road use, if you– and this is not something we’ve developed yet, but it’s certainly been simulated by many. They can form trains. They can go at high speed, perhaps much higher than our highway speeds here.”
Yes, the future is an uber-Uber world.
It’s also one in which Brin knows what is ideal for you: “It’s also really nice to not have a steering wheel, not have pedals. Maybe the seats should face each other, things like that. I’m not sure that the traditional car designs are ideal for self-driving.”
Take that, you steering wheel fetishists, you pedal pushers.
You might think you like being in charge of your own vehicle, going as fast as you like, turning off to go down a less-beaten path. You might have to stop thinking that way for the good of, well, everyone else who will have to stop thinking that way.
Page believes that this should be a time of abundance. Indeed, it doesn’t take much to make people happy.
“Housing, security, opportunities for your kids — anthropologists have been identifying these things,” he said. “It’s not that hard for us to provide those things.” Indeed, he estimates that we only need 1 percent of our resources to satisfy these needs.
Brin believes that government should use its fiscal power for what they see as the common good. He said: “Tax more of the things that we don’t want, like carbon.”
It’s quaint to believe that there is a “we” that agrees on everything that humanity wants and doesn’t want. Part of the problem with politics is that there isn’t that sort of agreement.
This is something Page acknowledged: “I do worry that when I look at the government– our interactions with governments around things we get interested in — spectrum or whatever — that it becomes pretty illogical.”
That’s always been the greatest frustration for those who believe that the world should be governed on rational principles. They seem not to accept that rationality isn’t a human’s natural state. How can it be when the stupidity of death hangs over us all the time?
Page would dearly love all laws to be limited to 50 pages. Every time a new law is enacted, he said, an old one should be removed.
However, he’s clearly frustrated that around the world there are different countries with different laws. This is getting in the way of Google’s universal mission. Can’t these countries get together and get with the program?
One criticism of clinging to rationality emerged at the same time as this interview.
In a piece called “The Curse of Smart People,” Avery Pennarun offered this: “Smart people have a problem, especially (although not only) when you put them in large groups. That problem is an ability to convincingly rationalize nearly anything.”
He added: “Smart people, computer types anyway, tend to come down on the side of people who don’t like emotions.”
For all the truth that logic is a very powerful tool, he said, the input needs to be very good. “If you know all the constraints and weights — with perfect precision — then you can use logic to find the perfect answer. But when you don’t, which is always, there’s a pretty good chance your logic will lead you very, very far astray.”
Pennarun is a Google Fiber engineer.