The Guangzhou government has come under fire for giving just three hours warning that it is introducing a monthly quota on car registrations.
The city's decision to limit new car registrations to 10,000 a month started at midnight on Saturday after being announced at 9pm.
The move took many dealers and would-be buyers by surprise, leading to frantic customers storming car dealerships before the deadline.
Salesmen at Guangzhou dealerships worked into the early hours as they struggled to meet demand.
'It was totally insane,' said Wu Bifang, a sales manager at an Audi dealership. 'Our clients were horrified.'
Wu said customers scrambled to borrow money from relatives to buy his dealership's cars, which can cost 300,000 yuan (HK$367,000).
One marketing manager was stunned when he heard the news.
'I had planned to buy in August when I had saved enough, but I had no choice and had to run down to the dealer to settle payment,' he said. 'I paid 160,000 yuan for a Toyota which might have cost 150,000 yuan.'
The government says the policy is necessary to ease traffic congestion and curb pollution.
Similar policies have already been implemented by Beijing, Guiyang and Shanghai.