The city governments of Xian and Hangzhou yesterday scrapped plans to cap the number of new car registrations as growth in car sales across the country slowed again last month.
The number of passenger cars delivered by manufacturers to dealers rose 10.71 per cent to 1.12 million last month, markedly slower than the 15.77 per cent growth reported in June.
Including commercial vehicles like trucks and buses, whose sales have been in steady decline since March last year, overall vehicle sales rose 8.2 per cent year on year to 1.38 million last month, according to data released yesterday by the China Association of Automobile Manufacturers.
That compares with a growth of 9.9 per cent in June and 16 per cent in May.
Analysts believe manufacturers are cutting shipments to dealers as inventories pile up.
Last week, the China Automobile Dealers Association said the ratio of sales to stock rose to a 'dangerous level' of 1.98 in June, meaning there were almost two cars in stock for every new one sold.
The recommended level is 1.5.
Amid this general slowdown, the Xian government, which had earlier said it would launch a public consultation next Wednesday over a proposal to cap the number of new car registrations in the city, pulled the plan altogether yesterday.
The Hangzhou government also told local media the same day that the time was not right for such a policy.
The market has long expected Hangzhou, Shenzhen and Chongqing - where car ownership exceeds a million vehicles - to impose the cap following the example of Shanghai, Beijing, Guangzhou and Guiyang.
Car shares plummeted and dealers took to the streets last month when Guangzhou became the fourth city to limit the number of car registrations and set a cap at 120,000 a year - less than half of the city's 300,000 new car sales last year.