Gentlmen, Start Your Engines! If You Have an Engine


China has massive problems.  They are growing too fast and can’t keep infrastructure up to the increasing demands.

They have limited families to 1 child.  And next on the “restricting block?”

Cars.

More precisely, car licenses.

But why would they do that?

Traffic congestion is a persistent problem in Beijing and throughout much of China, with an IBM survey this year saying the Chinese capital is tied with Mexico City for the title of “World’s Worst Commute.”

And so, what do you think government is going to do when faced with a problem it can’t handle?

Regulate it:

Officials are planning to issue about 240,000 new vehicle licenses next year, compared to 700,000 registered so far this year.

And the economic impact of such a move?

  • this latest rule change would hit makers of low-end domestic vehicles hardest, potentially forcing half of such auto dealers within the municipality to shut down
  • Brilliance China Automotive Holdings Ltd.  which sells a large percentage of its vehicles in Beijing, saw its shares off 6.9%
  • Geely Automobile Holdings Ltd.  fell 6.3%.
  • Dongfeng Motor Group Co. slid 9%

Showing further that people will change their behavior to adjust to regulations:

The week leading up to the well-flagged announcement saw consumers scramble to beat the new regulation, with reports saying 5,000 applications a day had been fielded for new vehicle license plates.

And while the report doesn’t mention this, imagine what’s gonna happen to the price of a properly registered car on the used market?

Traffic congestion is a persistent problem in Beijing and throughout much of China, with an IBM survey this year saying the Chinese capital is tied with Mexico City for the title of “World’s Worst Commute.”
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