The following account is a very entertaining and factual first-hand description of the process of buying a new car in Shanghai, which is also not unlike the process for buying a brand new apartment in Shanghai! This was written by one of my GM expat colleagues in China, and is posted here for your entertainment!

Buying a New Car in Shanghai

by Ken M.
中国 上海

The short version of this story is that last year I decided buy my wife a car here in Shanghai. My wife is a Shanghai resident. GM provides me with transportation, while I live here. But, I really don’t know how long my assignment will last, and if we move, her family will remain, and any time we are in town, we will need transportation. That’s the logical reason, here‘s the real reason; Having a car in China is a huge prestige thing, and it will give her family, a lot of “Face.” Face is a very important thing in Chinese culture.

This story is about what’s actually involved when you buy a car in Shanghai. In the process of buying a new car, I learned just how time consuming (overall, I spent one year), expensive (overall I spent approximately 170,000 rmb, $25,000 USD) and laborious the process is here in China. It makes you wonder how we sell all the cars we do. In this process I learned a lot, but most important, I gained insight as to why the customer perception is different here in China, than back home in the States.

When I first arrived in China, I used to ask, “Why do they do it that way?” Dave R., a friend and colleague, who had lived here in Shanghai a couple of years, told me something rather profound. He said: “Ken, this is China. There are 1.3 billion Chinese here; they have a history and culture that goes back thousands of years. They have ways of doing things that make absolutely no sense to us as Westerners. So you have to try and integrate, they are not going to change for you.” He told me: “Just remember; It’s not good, It’s not bad, It’s just different in China”

Over time I have learned to appreciate these differences. So if the tone in my story seems sarcastic or condescending, believe me I don’t mean it that way. It is just my way of trying to add a little levity from a Westerners’ point of view.

If you want to know just how different buying a car in Shanghai is, then read on…

Step One: Start saving and spending money. Normally cars are bought for cash. This will be the first time I ever purchased a new car with cash. Having a Chinese wife makes this first step possible. When we first started talking about buying a car a year ago, she started saving money.

Step Two: Get a drivers license. You must have a Drivers License to buy a car. Actually, my wife had to get driving lessons. It’s not unusual for adults in China not to know how to drive. Unlike most Western countries, students don’t get driving lessons during their school years. For example, it is not unusual for engineers to graduate from universities, lacking any driving experience. This is changing, but today in China, most people are just getting their first car.

You need to get into a driving school. Actually, this would seem fairly straight forward. But my wife actually did quite a bit of research on the internet to locate driver training companies. In the end she actually changed companies and demanded a refund when she was unsatisfied with the amount of time she was getting behind the wheel. The Government licensing bureau requires a successful passing grade certificate from a driver’s training school, prior to allowing you to apply for a driving license.
(Time: 3 times a week for about three months.)(Cost, 1500 to 3000 rmb.)

After passing your school test, you can take the Licensing Bureau driving test. You fill out several forms, pay several different fees and get your forms chopped. (A chop is Chinese Stamp that is applied to your official document certifying you have paid your fee.)

Step 2a; Get the drivers license! I wrote a story about getting my driver’s license in Shanghai a couple of years ago; it’s not much different for the locals.
(Time at the licensing bureau, better part of a day, cost 250 rmb.)

Step 3: Get a License Plate: You might logically guess that at this point you would simply; Go pick a car. You’d be wrong. You can't buy a car until you have a license plate. You can purchase a temporary license, but this is expensive and you still have to get a license plate. So, very few Chinese use this option.

Ok, so Step 3, you go to Government Bureau and buy a license plate. Wrong again. In Shanghai they have quota of license plates that the government makes available once a month. To maximize the revenue collected they have developed a, lets say, very unique auction process. In other words; eBay it is not!
(Time: 3 months) (Cost: 29,700 rmb, $4200 USD)

I will attempt a short version of how it works:

First, you must purchase a bid pack at the local licensing board. We opted for the computer internet version. You can also bid by phone or in person. But most people use the internet. In your bid pack, you get a pamphlet of rules, a computer disk, and registered ID. This ID is good for three months, if you’re not successful during the three month period, you have to return and purchase another one. The auction is held one Saturday every month. Screw up, and you have to wait till next month. But what could go wrong? Three months should be plenty of time to get a license plate. The short version is; it took us all of three months, if you want to know why… Read On:

Regarding the bid process, it’s unlike anything I've ever experienced before. Simply putting in a high bid does not work. You’re allowed three bids. The process starts at 10 am and finishes at 11:30 am. You can see how many people you’re bidding against. They tell you how many plates have been made available that month. You also know what the average price paid was during last month. Most everyone starts out with a low bid. You can see what the average bid price is. But your next bids have to come within a narrow 1,000 rmb band around the current average bid, or they are rejected. When you put your bid in, they send you a confirmation number that you must supply with your bid. If you’re a fast typist, this adds about 30 seconds to the bid process.

Here is the issue. For the first hour and twenty-nine minutes you are just watching the bidding price and number of bidders. During the last minute you must understand how quickly the price is rising, as everyone else is also putting their last bid. The system will only accept your bid if it is in the bid window. Because you must supply the confirmation number, you don't have time to make a follow up bid, if your bid is not accepted, “Game Over”. Here is the final killer. The last bids accepted, supersede any previous bids, even if the previous persons bid was for correct amount. So in a nut shell, it's one hour and twenty nine minutes of boredom followed by one minute of terror.

First month, we were just too slow in getting the bid in, and didn't realize that the system slows down because of all the people making bids in the last minute. Our bid amount would have been accepted, but it arrived 10 seconds too late. We were disappointed, but figured we would get it right the next time.

Second month, we were 100 rmb too low. We actually thought we were bidding high, but average price rose faster in the last minute than we anticipated. We were really bummed out this time.

Third month, to say we were nervous is an understatement. After all, if we didn't get a license this time, we would have to go down and purchase a new bid ID. During that last crucial minute we were shouting the bidding prices out loud to each other;
“Do you think 29,500 is too high?”
“Yes, that’s way too high, that will reject for sure.”
“Hurry up put something in quick”
“How about 28,500?”
“That's too low!” “Quick, Quick!”

You get the picture, Pandemonium! I'm sure the neighbors were wondering what all the commotion was about. After you put in your final bid, the web site goes down for about 20 minutes. We were both sure that we had missed again and we sulked around the apartment preparing ourselves for the bad news.... But Eureka! We got our license for the fabulously low price of 28,700 rmb (approximately $4,220 US Dollars). The average price was 29,100 rmb. So if we had been 100 rmb lower, we probably would have missed again. At the time we put our last bid in the highest bid accepted was 27,900. We were afraid that if we bid more than 28,700 our bid would not be accepted.

So there you go, buying a license plate in Shanghai; A process that I don’t recommend to the faint at heart.

Step 4: Go down to the dealer and buy a car. So now you just go down to a dealer identify yourself as a GM employee and get the vehicle discount, Right?.. Wrong again. It turns out that GM China does have a discount program and Expat employees are also eligible. Discounts vary depending on the brand and model. You must get an application form approved by HR. We got this done and we were told that a special dealership in Shanghai processes employee purchases. We identified the make/model and waited for the dealer to contact us. (Time, another week)
The dealer told us we would have to wait about two weeks for the vehicle to be delivered. (There was public holiday for the Dragon Festival, Total Time: Four weeks)

Step 5: Go down pick up your car and drive home; Right? Wrong again. We got the call from the dealer and we went down and purchased the vehicle, paid the taxes and the insurance. Yes that’s correct; you purchase your insurance at the dealership. If you have ever been on the roads here in China, then you know I purchased every bit of insurance possible. The salesman said he needed about three days to get the vehicle registered and safety tested. So, NO driving home yet! Safety Testing! Oh yeah, you get to pay 100 rmb for that too!
(Time, Four hours, because we had to wait for the insurance company to approve the form, so we could get it chopped).
(Cost: Epica SE 119,000 rmb, $17,500 USD. The car it self was pretty reasonable, mainly because of my discount. Without the discount, I estimate it would have been 10 to 20% more expensive than in the States.)
(Taxes, China taxes are affected by the displacement size of your engine. I bought a 2.0 Liter, so that increased the tax, plus there is new tax for road building and maintenance, approximately 10,000 rmb.)
(Insurance; is dependant on the coverage, 5,550 rmb)

Step 6: Go down pick up your car and drive home; Right?... Well maybe not. This is when you get to pick your license plate numbers. In China the number 4 sounds like word death when spoken, so no one wants a license plate that includes the number 4. For this and other cultural reasons, a lot of consideration goes into deciding what the license plate numbers should be. We spent several evenings discussing the numbers we would like. (Personally I really don’t care what numbers are on the plate, but being a culturally sensitive type of guy, I threw my self into the process of picking a Lucky Chinese License Plate Number.)

If you want to know about the Lucky License Plate Number picking process, read on:

The dealership maintains a License Plate Office. When we walked in, I was surprised to see four people sitting behind desks. The License Plate Number picking process involves filling out a form (of course). Listing up to six numbers that you would like and then paying a fee (of course). After you pay the fee, you get the all important chop. After the chop, you can go to the last desk. The lady there inspects the chop carefully (I don’t know why, she just watched the guy next to her apply the chop), and then she looks your numbers up on the computer to see if any are available. (Total time elapsed from the time we entered; to this point was approximately 30 minutes.) We were the only customers in the office. That’s just how long things take. Anyway, of all of the numbers we submitted, I expected that at least one would be available. None were. It seems that all the Chinese like similar numbers, thus these numbers are almost always already taken. The most important thing for me at this point is that if you can get your number approved, you can get your plate and DRIVE HOME. But if not, you guessed it; you get to return the next day to try again. I did “NOT” want to return again the next day!

I noticed a machine in the corner that looked similar to a slot machine. Like the kind that you would see in Vegas. It listed what looked like, “License Plate Numbers”. So I naively asked, “How do you get one of these numbers?” You guessed it (at least you should have if you have been paying attention), the process involves filling out a form, paying a fee and getting a chop. Upon completion of this process, (another 15 minutes), you get a barcode. You take the bar code to the License Plate Number Slot Machine and push a button. The screen starts flashing, and numbers start whirling around on screen, similar to Bells, Stars and Cherries in a slot machine. As they slow, you start seeing numbers populate a grid and finally, you are presented with six license plate numbers that you can pick from.

To our utter amazement and joy, one of the numbers presented was 8686. You have to be Chinese to truly appreciate the significance of this auspicious number, but just let me say, everyone in the room started cheering and shouting, people from outside came in to look. Suddenly there was a whole crowd standing around the License Plate Slot Machine. My wife and I were afraid to touch anything, one wrong move at this point, could result in the wrong number being picked from the possible six numbers in front of us. This moment was even more intense than the Shanghai On-Line License Plate Auction. We were frozen in fear and excitement.

Nervous banter ensued amongst the people behind us, and ultimately, one of the guys in the office came forward. Based on his vast experience, the consensus was, he was the most qualified to complete the transaction without making a crucial mistake. He reached out with his pen and touched the button on the touch screen, but nothing happened. I kid you not, there was a 'Oohh' and 'Aaww' followed by a hush from all the spectators, (which by now numbered in the teens.) He reached out again, this time he touched it with his finger, and the number flashed and came up again in a Big Box on the screen.

I knew he had done it correctly when the room went up in a roar of excitement, and my wife started jumping up and down, yelling; “we got, we got it!” Then, just as suddenly as it began, everyone turned around and went back to business. But you couldn’t wipe the happy expression off my wife’s face for three days.

To this day, when you talk about buying a new car, the first question you get is; “How Much?” Followed by; “What is your License Plate Number?” We proudly say 8686, which always draws a comment like; “Wow, that’s a very good number.”

Well to wrap this up; the forth guy in the office (I was wondering what his job was) got up, opened up a cabinet and rummaged through a pile of plates. He found 8686; we went outside and installed the plate. Finally! We got to drive our new vehicle home.

Step 7. Accessorize Your Ride. There is one other matter, I want to bring up. It has to do with accessories, specifically Floor Mats. I know this seems inconsequential. But I work in the GM quality department, and we have noticed that in China, people complain about the floors mats. They say; “they move around and don’t fit the car correctly.” I happen to know that this car comes with factory floor mats that anchor to the carpet and don’t move around. They are not standard equipment, so in China you have to purchase them as an accessory. So, I specifically asked for a set of factory floor mats. I did this on my first visit, followed up by an emphatic statement; “When I pick up the car next week, please make sure you have installed the factory floor mats.” The sales person said; “Oh the factory floor mats are very expensive, you would do better to buy them somewhere else.” I said; “I don’t care what they cost, I want the factory floor mats.”

Well as you can probably guess, the car did not have floor mats installed. When I protested, the salesman confided that they didn’t really have factory floor mats. I suspect that what they carried at the dealership probably looked similar to the factory mats, but were some form of replica. No matter how much I protested, I wasn’t getting anywhere. So, after all of my requests and protests, I ended up leaving the dealership without buying factory floor mats.

What I have learned is that there is a whole cottage industry here in Shanghai that supplies window tinting and floor mats. Within days we were inundated with offers for window tinting & floor mats from a variety of sources. It seems like everyone knows someone in the business. It’s like AMWAY or Mary Kay, there are probably thousands of small businesses that provide these necessary accessories. I ended up paying 1500 rmb for window tinting, and “FREE” floor mats, they also threw in some air freshener. The floor mats fit OK, but I will always remember I couldn’t get the real thing. So, as I understand the situation, the Chinese don’t buy factory floor mats. No business wants to stock inventory that people don’t buy. So bottom line, while theoretically the factory floor mats are available, in reality nobody buys them and you can’t get the factory floor mats in China.
(Time: one more week to get the accessories, Cost: a bargain, 1500 rmb)

So there you have it, “Buying a car in Shanghai”, from Step 1; “Start saving and paying money”, to Step 7; “Accessorizing Your Ride.” At each step of the process, I was given a lot of time. During this time, I began think about the things that made me unsatisfied. We Westerners are familiar with the term “Buyer's Remorse”. In China, you tend to get “Buyer's Remorse” before you even finish buying the vehicle.

Buying a car in China is more like buying a house, with the offers, counter-offers and follow up phone calls with the salesman. This experience also gave me greater appreciation for the Sales Staff in China. They have to be very skilled at keeping the customer happy during the whole buying process. In short, unlike in the States, they don’t just get a contract signed and send the customer on their merry way, with a set of temporary plates. In China they must keep the customer signed up and happy for weeks, or in my case, months. Hats off the great sales staff in China!

One last observation, with license plates going for over $4,000 USD, it’s no wonder that there is virtually no used car market in Shanghai.

Ken M.
中国 上海
June 2009