What Does That Have to Do With the Price of License Plates in China?

(Photo: Ole Bendik Kvisber)

Bloomberg Businessweek reports that in Chinese cities, the cost of obtaining a license plate (about $6,900 back in 2011) can now exceed the cost of a vehicle:

Shanghai is one of four Chinese cities that limit car purchases by imposing quotas on registrations. The prices paid at Shanghai’s license auctions in recent months — 90,000 yuan ($14,530) — have exceeded the cost of many entry-level cars, the stronghold of Chinese brands such as Chery, Geely, and Great Wall. While residents with modest incomes may be able to afford an inexpensive car, the registration cost is often beyond their reach. “Whenever there’s a restriction of new car purchases through the quota system, there is always a big impact on lower-price cars like the ones we make,” says Lawrence Ang, executive director of Geely Automobile Holdings, whose Panda minicar sells for 37,800 yuan.

In our podcast “The Cobra Effect,” we looked at license plate rationing in Bogota, where households purchase two cars in order to be able to drive every day of the week. In China, counterfeit military licenses plates, which allow drivers to avoid being pulled over by the police, are popular. This week, the Chinese government announced a crackdown banning military licenses for luxury vehicles.


Mark

It's just like taxi medallions in NYC.

Colin

In Singapore it is More extreme. The cost of a license exceeds the value of most cars.

CdrJameson

In the UK the annual cost of insurance for a new driver usually outweighs the cost of the vehicle.

If you have a claim even that massive amount goes up.

This leads to a situation where it pays off to buy a terrible car, insure for a year and not drive.
The premium then goes down significantly, even though you're no better at driving than you were the previous year, having had no practice.