WTO Entry Cuts Bid Price of Shanghai Car Plates

The average successful bid at this month's auction of private car license plates in Shanghai was significantly lower than prices paid at last month's sale, a strong indication that many would-be buyers are waiting to see what effect China's entry into the World Trade Organization will have on car prices, analysts say.

This month's lowest winning price was 5,500 yuan (US$662), or two-thirds less than last month's low price, and the second-lowest successful bid of the year. The average winning price fell 3,383 yuan to 13,593 yuan.

Individuals and privately owned companies in Shanghai must bid for private license plates before they can buy a car. There is no floor price for plates as long as they are used on domestically built automobiles.

"China's WTO entry may curb growth during the peak year-end car-buying season," said an official with Shanghai International Commodity Auction Co Ltd, organizer of the monthly sealed-bid auction.

Analysts noted that a wait-and-see attitude is expected to last until early next year, as buyers wait an expected fall in car prices following China's entry into the WTO.

Buyers are also holding off because of rumors the city will provide free license plates next year, or at least greatly increase the number of plates for sale, which would reduce the prices. So far, the city has denied these rumors.

This month was the first time the local government allowed foreigners with a local residence permit to bid for private plates. In the past, foreigners had to buy plates at a special sale, and the number of plates available was very limited.

Three foreign bidders won their licenses at the auction, said one official, who declined to identify the three.

Just last month, the government decided to allow military personnel and non-permanent residents of Shanghai to bid for private plates, which resulted in sharp rises in the number of bidders and bidding prices.

Ironically, prices at this month's auction may have been low because winning bids last month were the highest this year, scaring off many potential bidders, the auction official said.

In an effort to curb price after last month's high bids, the government significantly increased the number of plates for auction this month, he added.

On Saturday, the auction house, which refused to reveal the highest bid and the number of bidders, sold 2,000 car plates - 300 more than last month and the most of any month this year.

The city government sets the number of license plates for sale every month to limit the number of new privately owned cars in Shanghai.

(eastday.com December 24, 2001)

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