Beijing Plates Harder to Win Than Roulette Spur Loopholes: Cars

Raising the money was once the big obstacle to auto ownership in China. Now it’s getting the right license plates.

To ease congestion in the biggest cities, officials are trying to cap the number of vehicles. In Beijing, residents have a better chance of winning at roulette than in the capital’s monthly lottery for new auto licenses. In Shanghai, buying a set of plates in the city’s auction system can mean spending more than on the car itself.

Small wonder then that resourceful motorists are finding ways around the rules. An entire industry has sprung up to help them, from services that register cars in other towns, to brokers of surplus licenses to thieves and counterfeiters of plates.

“We can’t do business without a car in such a huge city,” Beijing-based fruit importer Jason Chi said, explaining that after two years of failing at the lottery he registered his Buick Excelle for 100 yuan ($16) about an hour’s drive away in Langfang, Hebei province. Applying twice a year for permission - - with restrictions -- to drive in Beijing is a worthwhile hassle, he said. “What other choice do I have?”

China’s regional patchwork of vehicle registration rules mean loopholes big enough to drive 1.5 million cars through. That’s the estimated number of autos in Beijing, Shanghai and Guangzhou that are registered elsewhere, according to JSC Automotive Consulting. The problem will only grow as more cities plan quotas in a country where car ownership is only about 1/14th of U.S. levels.

“Policy makers know they cannot kill the demand for cars,” said Lin Huaibin, a Shanghai-based analyst at auto researcher IHS Automotive. “If people really want to buy a vehicle, these policies won’t stand in their way.”

Quotas Coming

Annual sales in the world’s biggest auto market may reach 30 million by the end of the decade, from about 20 million this year, China Association of Automobile Manufacturers says. Shenzhen, Chengdu and Chongqing are among eight cities considering quotas to tackle congestion, the group says. As well as Beijing, Shanghai and Guangzhou, Guiyang, capital of Guizhou province, already has the curbs.

Beijing in 2010 announced a cap of 240,000 new vehicles a year, parceled out in monthly lotteries, after the city was voted as having the world’s most painful commute in a global poll by International Business Machines Corp. Fewer than one in 80 applicants were successful in the July draw, compared with the 37-to-1 odds they’d get on a single-number payout playing roulette in Las Vegas.

Even taking into account multiple family members taking part to stack the odds in a wannabe driver’s favor, the demand shows how for many Chinese urbanites the prospect of sitting out a tailback inside their own air-conditioned bubble is preferable to crammed and inadequate public transport.

Shanghai Auction

In Shanghai, which has been auctioning license plates since 1986, winning bids hit a record 90,000 yuan this year, enough to buy a new Volkswagen Santana sedan, according to car-pricing website

Jiang Ruming said he plans to drive about 900 kilometers (560 miles) to register his Volkswagen Touran in Yichun, Jiangxi province, where his parents own property.

“It’s not just about the money,” said Jiang, 35. “The auction system isn’t right as it’s the government restricting my own property.”

For 3,800 yuan, Smart Car Service in Shanghai will arrange an appointment and prepare documents for owners to register about 1,000 kilometers away in Hubei province. For 6,000 yuan, the agency will handle the entire process in nearby Anhui province, according to its website. Just hand over the keys.

Restricted Driving

There are drawbacks to out-of-town plates. Non-Shanghai registered cars are barred from rush-hour freeways. In Beijing, drivers must get temporary permits for either seven days or six months, and then can’t use inner city roads during peak hours.

Car owners are also in a race to outmaneuver regulators.

The southern city of Foshan asks for proof of residence to register there after neighboring Guangzhou last June said it would half the number of new licenses this year. Buyers flocked to Foshan, with as much as 50 percent of sales coming from Guangzhou residents, Liang Xianxing, a manager at a Shanghai Volkswagen Automotive Co. dealership, said in an interview in Foshan. Business returned to normal after the new rule, he said.

Beijing residents will soon no longer be allowed the six-month pass for out-of-town cars, according to the city’s traffic management bureau. That may tempt more drivers into illegal or gray areas.

Exit Strategy

A Land Rover owner was jailed for 15 days and fined in July 2011 for using forged Beijing plates, according to the traffic bureau’s website. Some dealerships rent out unneeded plates belonging to other individuals or companies, which technically are non-transferable.

Laura Zhang, a 28-year-old interior designer, found her own way to escape the hassle of car owning in Shanghai: move. She had to take a day off work last year to make the six-hour round trip to register her auto in neighboring Zhejiang province. Now she rides Hong Kong’s subway to work each day.

“Public transportation here is good,” said Zhang, who sold her Ford Focus in June. “You don’t really need a car.”

— With assistance by Alexandra Ho, and Tian Ying

Before it's here, it's on the Bloomberg Terminal.