If you're an auto executive searching for signs that China's party may be over, the auto manufacturing hub of Guangzhou is a pretty good place to look.
This prosperous south China city of 16 million residents has limited new-car sales to 10,000 a month, citing issues of congestion and air quality. If you want to buy a car in Guangzhou, you have to enter a lottery. Good luck.
A New York Times story last week said the new limits would be akin to Detroit or Los Angeles slapping restrictions on car buying, and the analogy holds up pretty well. The auto industry is huge business for Guangzhou, China's third-largest city, located in a bustling industrial region just north of Hong Kong. Guangzhou Automobile Group, which has joint ventures with Toyota, Honda and Fiat, is based there, and Volkswagen is building an assembly plant in the region.
The cities of Beijing, Shanghai and Guiyang also have imposed limits on auto sales. And if Guangzhou can swallow such restrictions, other Chinese cities may not be far behind. In fact, Bloomberg News recently cited a July 2 report by Morgan Stanley that 11 other cities may follow suit. So: Rethink that new factory? Or is this just a bump in the road?