Auction prices for car licence plates soared at the weekend ahead of a tax increase on high engine-capacity vehicles this week.

 

More than 10,000 people competed for 4,500 private car plates at the auction on Saturday, with a plate costing 38,932 yuan (US$4,806), the highest since last April. The price was 4,000 yuan (US$500) higher than last month.

 

Shanghai is one of the few Chinese cities that uses plate auction for car owners in a bid to limit the number of vehicles in the city.

 

Auction price reached as high as 45,500 yuan (US$5,700) last April, because of a limited number available. The quota increased afterwards, and prices have been around 30,000 yuan (US$3,750) recently.

 

People in the automobile industry believe it has been caused by a boom in sales, especially for imported cars with large engines.

 

Since the central government announced the new policy to raise the sales tax rates for cars with large engines to cut energy consumption and encourage the use of more economical cars, sales of big cars have been on the rise in the city.

 

It comes ahead of the new tax policy coming into effect on April 1.

 

It will increase the price of cars such as a Mercedes Benz by 100,000 yuan (US$12,500), Chen Shuyang, a worker at Shanghai Dexing Automobile Sales Company, told China Daily yesterday.

 

"At the moment, consumers who buy BMW or Mercedes Benz cars don't care much about the price of car plates," Chen said. "We predict the market to cool down after April 1."

 

Dexing is the flagship store of the three authorized outlets for Mercedes Benz sales in Shanghai.

 

"Most of my friends who buy domestically produced cars for about 100,000 yuan would want to have their vehicles licensed out of Shanghai, to save money on the plates," Chen said.

 

Another car plate auction is expected to be held in the city on April 15.

 

(China Daily March 27, 2006)