Many driven out of business by lack of demand after vehicle restrictions

Companies that offer top-up driving instruction services have seen a sharp fall in business since the local authorities started to restrict the number of new cars allowed on the city's streets.

The restrictions were introduced at the end of December to try to calm the city's traffic congestion.

Some 80 companies in the capital had offered additional driving instruction to newly qualified drivers, each company with at least 10 cars available for students.

Since the restrictions on new car ownership came in, one-third of the companies in the sector have either gone bankrupt or shifted to vehicle leasing, according to Li Yuguang, owner of a company that offers driving instruction who has been in the business for more than 10 years.

He said companies that are managing to stay afloat are scraping by on significantly less business.

Taking his company as an example, in previous years at least 40 people signed up for extra daily lessons during Spring Festival. Now, fewer than 10 are on the books.

"Most of our clients are people who have a driver's license and are thinking about buying a car," he said.

"But, due to the newly-released traffic measures, fewer people are eligible to buy cars. Therefore, fewer people will pay for our service."

In addition, people without a permanent residence permit have also been the targeted costumers, but conditions for them to buy cars have become stricter, said Li.

Beijing announced new traffic measures on Dec 23, stipulating that only 240,000 vehicles, less than one-third of last year's figure, will be registered this year in Beijing. Car registration will be allocated by a license-plate lottery system. Private car buyers will receive 17,600 plates per month, on average.

The measures also say residents without a Beijing permanent residence permit will need to provide proof of having paid social security fees and personal income tax for five consecutive years in the capital in order to be eligible to purchase cars.

Hu Yong, a veteran private driving instructor lost his job last week because the company he worked for went out of business.

"I have been working as a private driving instructor for four years," he said.

"The Spring Festival season used to be the busiest time of the year because people needed to practice their driving skills and drive thousands of miles home prior to the holiday but I only received two clients in the past month."

Li said he is hoping the new traffic calming measures will help reshuffle the driving instruction industry, pushing substandard and small companies out of business but leaving room for others.

"Once the market gets rid of the substandard companies, we can raise the prices to continue the business," Li added.

The average cost of hiring a private driving instructor is 55 yuan per hour.