Court car auctions see rise in bids as desperate buyers chase licenses
Eager car buyers who miss out in Beijing's highly competitive license lottery are now turning to court auctions to fight over seized vehicles.
Officials at Xicheng district court say impounded cars under the hammer have become hot commodities following the capital's traffic control measures as they come with automatic license registrations.
"Vehicles seized by the court are not included in the new regulation policy, which is why the auctions have become much more popular," judge Tong Fei told METRO.
The sales rate at the Xicheng auctions has soared to more than 80 percent since the measures were introduced, official data show. The average used to be about 30 percent.
Beijing introduced the license lottery last December to limit the number of new cars hitting the roads each month. However, with less than 4 percent of applicants receiving one of the 17,600 private registrations up for grabs in the April draw, the move has led to many people being left frustrated.
Xicheng has auctioned off about 20 vehicles so far this year, with most belonging to owners unable to repay their debts. Winning bidders get ownership, a letter of cooperation and a license in their name from the transport authorities.
The auctions also work as an extra deterrent to drivers who break the law, said Tong, who explained: "If their impounded car is sold they will have no option but to take part in the city's lottery to get a new license."
He said an Audi A6 listed for 100,000 yuan ($15,393) that failed to sell in 2010 was snapped up for 120,000 yuan early this year.
Although some bidders are looking for classy cars at cut-rate prices for personal use, Tong said he found that "the cheaper the car is, the bigger the bargaining", as many will get the license and then scrap the vehicle.
"A (Volkswagen) Santana worth about 20,000 yuan went for 60,000 yuan in a recent auction," he added. "It's understandable. To buy a license in Shanghai costs more than 40,000 yuan."
Starting prices used to be 80 percent of the vehicle's evaluated value, with prices dropping every time the lot failed to sell. This meant car traders who bought in bulk and were willing to wait could enjoy huge bargains.
"Now the starting price is the full evaluated price, while the transaction rate is more than 80 percent in the first round of auctions," said Tong.
Fengtai district court has seen a 100-percent sales rate at auctions for impounded vehicles in 2011. "The winning bid has been double the starting price on average this year," said Li Chen, who works at the court.
The sales have attracted large numbers of people without Beijing hukou, or permanent residency, he said. Such residents are barred from applying for licenses unless they have paid tax in the capital for five consecutive years; however, at auction their status is not an issue. Vehicles have made up 62.5 percent of all seized items auctioned by Fengtai district court between 2006 and 2010, according to official figures.