Beijing to Cut Number of Cars Sold in 2014

China's capital, Beijing, infamous for its thick smog and heavy traffic, will slash the city's new car sales quotas by almost 40 percent next year, as it looks to curb vehicle emissions and hazardous levels of pollution, the city government website said.

The change in policy gives greater support for new, cleaner cars and could strengthen foreign carmakers' determination to accelerate growth in China's less crowded lower-tier cities.

In the last month alone, high levels of pollution have forced China to all but shut down the northeastern city of Harbin, a major urban center with a population of 11 million.

Over the next four years, Beijing will issue 150,000 new license plates annually, down from 240,000 each year now, according to the city government's website. Car buyers must put on plates before they are allowed to drive on Chinese roads.

That means Beijing's new passenger vehicles sales during the 2014-2017 period will be capped at 600,000 units, few than the city's vehicle sales in 2010 alone.

In addition, the government will allot a higher proportion of license plates every year to buyers of new-energy vehicles that need lower amounts of gasoline or use alternative energy. This could benefit electric automakers such as BYD Co Ltd.

The number of plates for such vehicles will triple from 20,000 in 2014, to 60,000 in 2017, accounting for 40 percent of that year's total plate quota.

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I wonder what the economic knock effects of cutting back the sales....