Chinese Cities to Curb New Vehicle Sales to Combat Pollution

Several cities in China, the world's largest auto market, will restrict the sale of new vehicles this year as accelerating deliveries force municipalities to step up efforts to combat air pollution in the world's biggest carbon emitter.

Tianjin is the latest major city to restrict new vehicles sales starting this year, fuelling a surge in sales in December.

Beijing, Shanghai, Guangzhou, Guiyang and Shijiazhuang have imposed restrictions and other cities are expected to follow soon.

China is the first country the world over to report in excess of 20 million vehicle deliveries in any given year.

Total wholesale deliveries rose 14% to 21.98 million units in 2013, while passenger vehicle sales shot up 16% to 17.93 million, the state-backed China Association of Automobile Manufacturers said on 9 January.

China's motorisation, a blessing for several global automakers, has choked its cities. Air quality is getting worse and smog levels have at times exceeded World Health Organization (WHO) safety thresholds by almost 40 times.

Vehicle emissions now account for 20% of PM2.5 fine particulate matter that pose the greatest health risks because they can penetrate deep into the lungs, according to the official Xinhua News Agency.

"As more and more big cities put in place restriction measures, automakers will have to count on smaller cities and inland areas for growth," said Harry Chen, a Shenzhen-based analyst with Guotai Junan Securities.

"Local automakers will really need to bring on their A-game to compete with foreign joint ventures to survive," Chen told Bloomberg.

Big Winners

Ford Motor, a late entrant in China, profited from the popularity of its Focus car, and logged the biggest growth among the top foreign automakers. China deliveries surged 49% to 935,813 units, outselling Toyota on an annual basis for the very first time.

GM saw sales climb 11% to 3.16 million last year, while Volkswagen beat its earlier annual record by selling 2.96 million vehicles in the 11 months to November 2013.

For Toyota, the global leader in auto sales, China sales climbed 9.2% to a record 917,500 units and the company forecast deliveries would exceed 1.1 million this year.

Japanese rivals Nissan and Honda also sold a record number of vehicles in the world's second-largest economy in 2013.