Chinas auto industry likely to suffer $9 bil. loss under new regulation in Beijing

HONG KONG -- China's auto industry will likely lose 60 billion yuan ($9 billion) in 2011 as the capital city has set up new regulations to tackle its increasingly severe traffic congestion, a Beijing-based think tank said Thursday.

Beijing Economic Information Center estimated that automakers in China will record sales of 100 billion yuan in the city of Beijing, down from last year's 160 billion yuan.

The estimate comes as the Beijing municipal government began in January to limit the issuance of new car license plates to 20,000 per month in a bid to alleviate the city's traffic congestion. Beijing plans to issue a total of 240,000 new car plates in 2011.

China Automotive Logistics Association earlier forecast that 500,000 new cars will be sold this year, down by about 1 million units from last year's figure. It said Beijing's new regulation will negatively impact more than 30 percent of automobile retailers in the capital.

Industry watchers say China's overall auto industry will not experience growth as robust as in the past, as a number of Chinese cities start to follow suit of Beijing and prices of imported oil will affect domestic demand.

The China Association of Automobile Manufacturers forecast that new car sales in the country will reach 30 million units in 2015, including the number of imported cars. The annual growth rate of the auto sales will stay at an average of 10 percent, compared to more than 30 percent in 2009 and 2010, it said.

Driven by the rapid expansion of the auto industry, China surpassed the U.S. in 2009 to become the world's largest automobile market. (Yonhap)