Car makers shrug off new China sale restrictions

Three of the four cities where restrictions are already in place are Tier 1 cities, while the new restrictions will mostly be in Tier-2 cities.

Carmakers, from GM to Volkswagen AG to Toyota Motor Corp, as well as indigenous Chinese auto makers, are all shifting their attention to lower-tier cities.

"New customers will come from (lower-tier) cities, and we see great potential there," Christoph Ludewig, spokesman for Volkswagen Group China, said. "Main growth will come from (that) area."

Ford Motor Co, for instance, is increasing the number of dealers in China to more than 700 from about 500 stores it operates today. "The vast majority of (those) new dealers will be in those cities," Trevor Hale, a Shanghai-based company spokesman, said referring to lower-tier cities, which he said are likely to become the engine of growth in China's auto sector for the rest of the current decade.

And the restrictive auto purchase policies may end up being as ineffective in solving air quality and congestion problems as they are in stemming overall sales.

One reason is passenger car emissions, sizable as they might be, are a much smaller contributor to harmful substances in the air, compared with heavy commercial trucks, especially diesel-fueled heavy ones.

Moreover, according to a recent report by the China Institute of Public and Environmental Affairs, a main source of air pollution in most Chinese cities is industrial production, rather than vehicle emissions.

"In the long run, the real solution (to pollution from automobiles) should be to improve the qualities of engines and petroleum, and establish higher standards for vehicle emissions," said Pan Xiaochuan, deputy head of the School of Public and Environmental Health at the Peking University.

Ma Jun, director of the Institute of Public and Environmental Affairs, said that 70-80 percent of China's air pollution comes from coal consumption and factory emissions, so the curbs won't help reduce pollution unless joined by other measures.