However, I don’t have a car plate from Shanghai, simply because it is too expensive. Instead, I drove 200 km away to Hangzhou (the capital of Zhejiang Province, south of Shanghai) to register my car there.
Now I am a Shanghai driver, bought a car in Shanghai, driving in Shanghai with a Hangzhou car plate. Sounds wired, isn’t it?
I thought I made a right decision three years ago. Now? I don’t think so.
The History of the Decision
In August 2003, you need to give government 38,500 RMB to get a car plate. In March 2004 (seven months later), it costs 43,000 RMB. In May 2004, the price dropped for the first time to 34,226 RMB, then to 21001 RMB the next month. I didn’t track the price of car plate since then.
Comparing to the high price of a Shanghai plate, to register in other city is attractive. It is almost free.
There are some limitations for these cars (there are 130 thousand cars running in Shanghai with outside plates), and more and more fees are added to these cars. Beside that, I need to drive my car personally to Hangzhou for annual checking which is not always pleasant journey.
Car Plate as Investment
With the explosion of number of cars in Shanghai, the recent bid result for car plates keep going up and is always above 40,000 RMB. I thought it has nothing to do with me any more, until I chatted with Jia about his experience to attempt sell a car.
When it comes to a point that you need to sell your car, the different is huge.
For cars with Shanghai plate, the plate is still a lot of money – according to the current bidding price for the plate. For most people, they can make some money because of the price difference.
For cars with other plates, the plate itself worth nothing, even lower the price you paid to get it. Meanwhile, since the car transaction involves transportation administration of another city, there are additional 3000 RMB for this.
So, the conclusion is clear:
1. To register outside Shanghai is cheaper, until you sell it.
2. To register in Shanghai is more expensive, until you sell it.
This teaches me a basic economic rule: when we buy something, always distinguish whether it is debt, or asset. By the definition of Poor Dad, Rich Dad, debts are something to take money out of your pocket, and assets help to put money into your pocket.
When we make decision about a deal, we should look at the both side of the equation. Take the Shanghai Car Plate or house example, you pay money on the left hand, and get some asset on the other hand, so you are still balanced in your Balance Sheet. To get a plate out of Shanghai, although on the left hand, I didn’t pay too munch money, on the right hand, I got nothing (not an asset). This is not a good idea.
P.S. It is not so fair to say I made a wrong decision since at that time, everyone was expecting the cancellation of the plate bidding in Shanghai. If that is the case, the asset disappears in a day.