Transportation Deployment Casebook/2018/Beijing Private Cars

=Qualitative Analysis=

The Use of Private Vehicles
The mode to be analysed is private vehicles in Beijing, China. The introduction of private cars aims to benefit the private car owners by providing them with a convenient and flexible way to reach a destination. As the number of potential car buyers in the market increased, improvements were made on the civilian vehicles such that they can also capable of providing a more comfortable driving experience such as featuring air-conditioning system, leather seats, heated and ventilated seats. Its main market is the group of people who prefer travelling to a destination without sharing with other people in an isolated space or reaching a destination where other transport modes does not reach.

Other Transport Modes in Beijing Prior to the Advent of Private Vehicles
Prior to 1949 (the founding of New China), there are no petrol private vehicles in China. The primary transportation modes provided to Beijing residents was the locomotives, bicycle and rickshaw (a two-wheeled vehicle drawn by man). There are indeed petrol vehicles used in Beijing prior to 1949 but only for the government or military use. Prior to 1949, the locomotives are the only mode that civilians can take to travel a relatively long distance (excluding planes that are only used for the military purpose). However, the locomotives have low energy efficiency and generate unpleasant noise. The mode that was publically used in Beijing is bicycles which are eco-friendly but can exhaust users if used for long distance. Man-powered Rickshaw travels at the slowest speed and is used for a shorter distance. Unlike bicycles which were publicly used, Man-powered Rickshaw were primarily used by people in higher social classes. After the newly established government established the birth of the new China in 1949, the vehicle's market was open to the public in accordance with the reform and opening-up policy. The Government see the needs of introducing cars in the market can partly ensure that Chinese people can be internationally compatible.

Invention of the Mode
The first “automobile” was built as a scaled down model around 1672. It was steamed powered and was a gift for the Chinese emperor. Nicolas-Joseph Cugnot built the first full-scale, self-propelled mechanical vehicle in about 1769. The external combustion engine was adapted to a variety of modes such as steam cars or steam buses during the first part of the 19th century. The design followed the same developing pattern and process but different outcomes were achieved. The internal combustion engine was invented in 1807 by Nicéphore Niépce and his brother Claude but was used on powering a boat. surprisingly, in the same year, the Swiss inventor François Isaac de Rivaz invented a similar internal combustion engine which was used to power a vehicle. The invention of combustion engine stimulates the development of the vehicle. Later on, the gasoline-powered vehicle was invented in 1893 and the diesel engine was invented in 1897. Steamed powered, electric powered and gasoline-powered vehicles have competed for a long time until the gasoline internal combustion engine dominated the market in the 1910s.

Early Market Development and the Role of Policy in the Birthing Phase
Purchasing a car was a luxury expense when it could be privately owned during the birthing phase. The initial market niches of the private cars are to serve successful people such as entrepreneurs. As a result, only tens of thousands of vehicles were bought in early years. China’s government encourage the development of domestic automobile industry by investing money to open country-owned automobile factory. A few brands became well-known locally, such as “Jie Fang” (means liberation). The functionality and shape do not vary significantly from car to car. The vehicles used in Beijing in early stages tend to have oval-shaped engine lid and roof (SUV alike) rather than sedans in recent days. In early car market in big cities in China such as Beijing and Shanghai, cars are marketed to the richest people (such as businessman) who needs cars to not only shorten their travelling time but also enhance their status. In 1949, there are only around two thousand cars in Beijing and the number of cars didn’t reach twenty thousand until 1971. The length and area of urban roads in the country increased by 64% and 71% respectively over 1949 from 1957. The cars in early times did not feature sufficient luxury functionality or safety equipment that users enjoy today. For instance, those cars had manual gear and did not feature the seat belt, electric window, airbag or air conditioning. The number of cars gradually increased due to the fact that more and more people became rich enough to afford a car in accordance with the policies that the new government published. To achieve prosperity, the government initial propaganda used after establishing the new China was "letting some people get rich first". Indeed, the government did what they promised to the public, a large number of private- owned enterprise was subsided by China’s government if their business was recognized to help China's economy thrive. Although there have been a large number of people criticized that the government act of "letting some people get rich first" rapidly split the gap between the rich and the poor therefore the poor could never catch up with the rich anymore. Prior to 1949, Chinese were lacking knowledge and experience, due to the old emperors insisted proposing “secluding the country from the outside world”, people who have been living in underdeveloped China recognized cars only as a convenient and luxury transportation mode. Therefore, people were satisfied with the few features of existing cars in the market.

The Growth Phase
The growth stage occurred from 1959 to the nineties. From 1978 to 1995, the level of urbanization in Beijing has tripled in big cities in China (including Beijing) due to the impact of the reform and opening. The reform and opening became the driving force for a new wave of urban road construction, and the development of urban transportation to stimulate the urban economy. After entering the 80s, a severe imbalance between the supply (existing roads) and demand (increasing needs of cars) has been generated, along with the traffic problems have arisen in Beijing due to insufficient investment in urban infrastructure construction. In order to change the traffic status quo, the government have begun to build the ring road, large interchange, elevated road nationally. However, these rapidly constructed traffic infrastructures only partly improved the urban traffic conditions in a short period of time. These traffic policies tended to follow a similar pattern that accommodating the traffic conditions by continuously expanding the roads since the government believed that the Beijing, the Capital of China should have well-developed road systems. During the growth stage of the civilian cars in Beijing, the government did not publish any regulations which help to control the increasing number of civilian cars but just expanding the roads.

By examining the growth stage, the advent of joint-venture cobranding cars played an important role to prompt the development of the civilian cars.

In 1982, when the CNAICO (A famous national-owned car company) was established at the time, it immediately requested to increase investment to allow for the mass production of cars, in which would help to ease the situation in which cars were fully imported. At that time, some of the decision-making departments were conservative. The request was rejected due to the chairman of China insisted that "China does not pursue the capitalist way of life". As a result, CNAICO had to seek other channels to delivery this request directly to Xiaoping Deng. In June 1982, Xiaoping sent instructions back to the CNAICO and emphasised that “vehicles can be joint-ventured”. Therefore, the joint venture brand can develop into today's situation.

In fact, the first joint venture brand car in China was an off-road SUV, named BJ212 II (where BJ stands for Beijing). A product that was made by CNAICO and modified by American Automobile Company (AMC). Later on, Volkswagen was introduced to China as a joint venture brand car in China in 1893. Buying a car was no longer a dream for the middle class in the developing stage. The environmental issue caused by an increasing number of cars was not concerned by either government or the public until it came to the mature phase when PM2.5 started to be detected.

The Mature Phase
Prior to 2000, traffic congestion in Beijing mainly occurs in CBD (inner ring roads) and later it developed into all urban roads. As a result of building many roads, such as Second Ring Road and Third Ring Road in Beijing, it indeed partly relieve the congestion but on the other hand, it stimulates more potential car buyers to purchase a car due to the developed and convenient road network.

Since 2001, traffic congestion in Beijing has been intensified such that it occurred during not only peak hours but also off-peak hours in the daytime. Particularly, the number of private vehicles in Beijing has continuously rapidly grown and therefore intensifying the traffic congestion after permitting non-local residents to purchase license plates in Beijing in 2007.

A series of policies has been published to relieve the congestion and environmental pollutions caused by the massive use of private cars. In order to urge the increasing number of private vehicles in Beijing, the government has introduced a “driving with even or odd plate number” policy which stipulates that licence plate ended with odd or even number can only go on roads on limited weekdays. For instance, plate numbers ended with 1 or 6 are not allowed to drive on Monday, plate numbers ended with 2 or 7 are not allowed to drive on Tuesday and so one. The government tried to use this policy to stop each vehicle travelling one less day each week. In other words, in Beijing, A private car can only legally drive on roads for 6 out of 7 days. Otherwise, drivers who obeyed this policy would be fined for up to 100 Yuan (equivalent to 20 Australian dollars). However, in practice, there is still a large number of drivers drive on road every day and they would rather pay for 200 Yuan once they got caught rather than taking other alternatives to reach their destination since the policy does not deduct demerit points from the driver who transgressed this policy. The exact days that each private car can be allowed to drive on roads can decrease as the air pollution varies. Essentially, a more restricted “driving with even or odd plate number” published in Beijing when PM 2.5 index reached over 500. For instance, there is more than once that cars can travel 4 out of 7 days in that particular week when PM 2.5 was particularly high back then. Moreover, an important international convention held in Beijing can also affect the effective days that each vehicle can drive on roads during that particular time. In the worst case, primary and high school students were asked to stay at home to reduce the harm from breathing in the harmful highly concentrated PM 2.5.

A restricted car purchasing policy was also published. The policy capped that the number of vehicles can be purchased and issued as local plates in Beijing. This has directly influenced the car market in Beijing. Prior to being eligible to buy a car in Beijing, the potential buyers have to go through a lottery system in the Beijing Traffic Bureau which allows for only a small portion of buyers can be granted to buy their cars and legal plates issued by the Beijing Traffic Bureau.

Moreover, the government published the “Non-local Plate Vehicle Entering Beijing Fee” in Beijing in 2014. That is, any non-Beijing plate vehicle enters Beijing would incur a “Fee for Staying in Beijing” which varies as how long they intended to stay for.

These are three primary policies that were used to limit the growth of motor vehicles in Beijing. There are indeed other measures that government tried to limit the growth of the motor vehicle by promoting public transportation in Beijing.

Existing Beijing Subway System was improved since 2011. Air-conditioning replaced the traditional fans on old Subway line 1 and line 2 to provide passengers comfortable temperature in not only summer but also winter. Safety barriers were installed along the rails to ensure no passengers would fall into the rails. Buses lanes were extended from 300 kilometres to 450 kilometres in Beijing in 2011.

Monthly Bus Paper Tickets were partly replaced by the IC card (similar to Opal Card) which enables passengers to take buses and subways by simply tapping on and off the IC card. Similarly, a student with a valid student card is eligible to receive 50 percent off the adult price on buses but not subways.

=Quantitative Analysis=

Data Obtained


The table above were plotted to show how the quantitative approach categories the market status in different years.

A three-parameter logistic function were used to model the predicted number of private cars and its corresponding market status.

$$S(t)=\frac{K}{1+e^(-b(t-t_0))}$$

where:


 * S(t) is the predicted number of private cars in Beijing in year t
 * t is year
 * t0 is the inflection time (year in which 1/2 K is achieved)

The parameter K (saturation status level) is estimated from 580 (slighter larger than the largest number of privates cars) to 1300 and the proposed k value had been identified as 1100. The parameter b has been outputted as 0.131623181.

S curve
The S curve above shows that the number of private cars in Beijing will eventually reach ten million by 2060 and therefore enter the mature stage. This result was analysed based on the current increasing trend of the private cars. However, it failed to take policies into account in which are highly possible to be implemented by the government in the near future. The government has decided to keep the number of private cars in Beijing to be lower than 6.1 million by implementing the “Vehicle Mandatary Retirement” Policy which stipulates that a certain amount of cars has to retire and no longer appear in the roads in Beijing. Moreover, A low accuracy has shown in this prediction due to the varying “restricted vehicle purchasing policy”. Recall that this policy disputes that how many cars can be purchased and issued a local plate in Beijing each year. A decreasing number of plates had been issued each year since 2013. It is believed that the government will continuously decrease the number of plates that can be issued to the public to relieve the traffic congestion and air pollution. As a result, this prediction was not accurate enough to take account into the policies that might change in the future. It is noticed that the congestion condition, policies, infrastructure system and the population vary as time but the pattern of how these factors were interconnected to each other might not be simply predicted by the regression analysis. In other words, the prediction might not directly reflect how the congestion condition, infrastructure system and the population affect the number of private cars in the future.

The different time of stages of the life-cycle analysed from the qualitative approach is different from the quantitative approach. We see that the two curves of the predicted and actual number of private cars merged in the S curve graph. The sudden non-matching number of private cars took place around 2010 might be caused by the government intended to publish the "restricted car purchasing policy". Three periods that are outputted by the quantitative analysis are the birthing phase (1949-1990), growth phases (1990-2060) and mature phase (from 2060 on).

=Reference=