Prices at Shanghai's auction for car number plates fell this month from May's level, a sign that more expensive fuel may already be affecting people's desire to own cars. The average price for a car plate fell 1,100 yuan (HK$1,249) to 34,947 yuan, the lowest level since March, local media said yesterday. The drop followed a rise in petrol and diesel prices last week. Shanghai defends the controversial auction system - the only one in the country - as a way of limiting the number of cars clogging the streets, though the city also earns massive revenue from the sales. Beijing has announced that it will limit the number of cars on its streets from July 20 to September 20 based on odd and even number plates in a bid to reduce air pollution for the Olympic Games. The lowest successful bid in Shanghai's plate auction this month was 33,900 yuan. In January, auctioneers orchestrated a one-off drop in prices amid rising inflation and public criticism after the plates reached a record of more than 56,000 yuan in December. The number of bidders fell by 5,133 this month to 21,208 compared with May. They were competing for only 7,700 plates, the lowest number of the year so far. Despite higher costs for fuel and cars, an industry group gave a rosy forecast at the weekend, predicting car sales would rise 15 per cent this year to about 10 million vehicles. The China Association of Automobile Manufacturers said strong demand for passenger cars would support the growth in sales, even though higher prices for raw materials like steel would increase the end cost for buyers. Dealers say higher costs will not have a major impact on the luxury market, but people planning to buy economy cars might think twice. 'Previously, people were upgrading from an Alto to an Audi. Now, I won't even be able to sell Altos.' But government worker Shi Huizhong vowed that he would keep driving his Nissan as long as he could despite higher petrol prices. The government increased the benchmark retail price of petrol by more than 16 per cent on Friday, the first rise since November. 'I think the rise in prices is reasonable and inevitable because global oil prices have surged,' Mr Shi said as he queued at a service station. 'Although I will spend nearly 200 yuan more each month, I won't reduce my car use until I can no longer afford it.'