Wheels of Fortune: Buying a Car in Beijing
January 25, 2011 § 3 Comments
You live in Beijing and are tired of having your face smashed up against the window of the subway car of the #1 line during rush hour—or any other hour of the day for that matter.
So you’re thinking of buying a car. You’re not especially happy that by waiting until 2011 you missed out entirely on the tax incentive that the Beijing Muncipal Government had been offering: in 2009, instead of the normal 10% sales tax, you’d have paid only 5% (if you bought a car with a 1.6 liter engine or smaller); last year, you’d have paid 7.5%, still a bargain. But, today, the government, less eager to incentivize the automobile industry and more eager to reduce the horrific congestion on Beijing roads, has returned the tax rate to 10% (WSJ).
You know that the subway system is far more economical, a ride from one end of town to another costing no more than 30 cents; and you know too that traveling the same distance in a car is likely to take you 3 or 4 times longer than in a subway car. Still, the Zhou family next door has their shiny new Buick, or maybe it’s an Audi, so why shouldn’t you?
You can afford it, and you owe it to yourself and your family to show you can afford it. You figure, sure, the drive might take longer, but you’ll have your ac or heater going full blast, you’ll be listening to the music of your choice, and, instead of standing with your head pinned under someone’s armpit, you’ll be sitting comfortably in your climate-controlled leather seat. Yep, it’s time to take the plunge, you decide.
“Wait just one moment,” you hear the new lottery system telling you. Right!, now you remember. You don’t just go out, put down the 50k in cash, and drive away in your brand new automobile. The Zhous may have done that, but the Zhous bought last year, before the Beijing leadership declared that beginning December 24, 2010, interested buyers would have to enter a lottery to purchase a car. Why? Traffic in Beijing has become unbearable. Traveling a couple of miles can easily require 2-3 hours.
The city has become notorious. In an IBM survey, it and Mexico City tied for honors as having the worst traffic jams in the world—each scoring a 99 out of 100 on a “commuter-pain index.”
So now you ask yourself, “what are my chances in this lottery thing?” Turns out, not real good. You start crunching the numbers. In 2010, more than 800,000 new cars took to the roads in Beijing. In 2011, the government has capped the number of new cars—for the entire year—at 240,000. That’s a mere 20,000 each month. You’ve read the papers and know that on the night of December 23 alone, the day before the new rules went into effect, more than 30,000 cars were sold. You know then that demand is terrifically high. You also know from the papers that in the first 11 hours of 2011 more than 40,000 people registered for the lottery. By the end of the first week of 2011, when registration for January’s lottery closed, roughly 220,00 people had entered their names in the lottery, from which 20,000 will be drawn on January 26 (China Daily). Chances then: 1 out of 10. Not good odds. But they won’t get better in February’s drawing, you figure. The 200,000 less lucky January entrees will automatically be rolled over to the February lottery.
You’re desperate. You consider buying a car from a dealership in nearby Tianjin and registering it with your cousin there but discover that Beijing city officials have anticipated you: they’ve drawn up a rule disallowing all cars registered elsewhere from driving in Beijing during rush hours—which is most of the time. And police, according to the China Daily, are having a field day flagging down cars with non-Beijing plates and issuing $15 fines. No, that option isn’t going to work.
So now you’re struck with one, final brilliant idea: rent a car. It’s cheaper than buying in the end, you don’t need an expensive insurance policy, and you don’t have to enter a lottery. Unfortunately, this idea has struck others before it struck you. You discover that 90% of the cars available for rental in Beijing—and 100% of desirable models–have already been rented out.
You’re resigned now. Public transit is pretty good, after all. And you know that even with a car, municipal law, in an attempt to ease congestion, will require you to keep the car off the road one day a week—depending on the last digit of your plate. You’re reminded too that Beijing has just extended its subway system, opening up five new lines on one day (December 30) alone—so getting from place to place has become still easier and more convenient.
And yet, you can’t entirely free yourself from the thought that there’s always the February lottery. Or the March lottery. Or the ….