Authorities in Beijing want to clamp down on new car registrations to help ease growing traffic congestion problems.

Chinese authorities have proposed clamping down on car registrations in major cities like Beijing in order to ease traffic congestion - a policy which may impact the growth of China's rapidly expanding car sales.

In Beijing last week, the city government announced it would cap new car registrations to 240,000 a year. That represents only one third of new car sales in the city for 2010. Beijing accounts for about 5 percent of the Chinese car market.

The Chinese finance ministry also announced it would restore the sales tax on small-engined vehicles to 10 percent, up from the 7.5 percent rate in 2010.

Shanghai, a city with a similar population to Beijing, has had restrictions on new car registrations for years, and has only about a third the number of cars roaming its streets as in the Chinese capital.

Chinese cities are investing in new subway and public transport systems to meet the transit demands of their ever-growing cities. The city of Guangzhou, one of the largest hubs for car manufacturing, has built a large subway network over the past decade that has led it to avoid the congestion problems of Beijing.

Slower growth may not be such a bad thing for automakers who have been having a hard time keeping up with demand in China. Growth there has accounted for a large part of record sales numbers for Western automakers such as VW Group and GM. For the first time, GM will sell more cars in China than it does in its domestic market this year. And premium brands such as Audi, BMW and Mercedes-Benz are expanding their sales exponentially in China too and introducing local-only extended-wheelbase models, such as the A8 L, which are very popular.

And excess auto capacity in China may lead to the one thing Western consumers cannot yet buy that is made there - a car.


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