China To Introduce Drastic Measures To Curb Car Over-Population

China is paying a price for decades of unceasing economic growth and a burgeoning middle-class population: too many cars are now on the roads, causing not only unmitigated pollution but massive congestion as well. China's capital city, Beijing saw car sales of 4.7 million units—almost double the figure five years ago. With Malaysia's 2010 car sales of 570,000 units as comparison, it becomes clear that the Chinese authorities have a big problem on their hands, as they attempt to find a balance between satisfying the people's desire for car ownership, preventing further damage to the environment and keeping the automakers on track with their revenue growth.

In addition to a new subway system, the Beijing municipal government has decided upon radical measures, to be implemented in 2011, to clear up the roads and air. New vehicle registrations will be reduced in number to one-third of this year's 720,000. Only registered Beijing residents will be allowed to purchase a car, and only vehicles registered in Beijing are permitted to enter city areas during peak hours. And of course, parking fees in Beijing will see a rise, increasing the cost of car ownership, which would be burdened by a possible increase in vehicle ownership tax across China in 2011.

Beijing is following in the footsteps of Shanghai, China's largest and most prosperous city, which has struggled with car over-population longer than Beijing has. Now, auto industry observers fear that other major Chinese cities such as Zhejiang and Jiangsu will follow suit with similar measures, further slowing the auto industry growth. Even without Beijing's drastic measures, the Chinese auto industry is expected to grow 10 percent in 2011, compared with 30 percent in 2010 and 50 percent in 2009.