For at least a decade it has been highly touted as the world's largest auto market in terms of volume and rate of growth but that market became smaller this weekend when the Chinese government announced a series of measures to reduce its growing pollution problems.

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As part of its efforts to cut the choking pollution in Beijing and Shanghai, Beijing's Environmental Protection Bureau, known as PM2.5, said it will place tougher restrictions on the number of new vehicles allowed on roads each year with a goal toward curbing annual growth to zero, yes 0. 

The Chinese government said it plans to cap the number of vehicles on Beijing streets and roads to six million by 2018, all the while reducing fuel consumption of those vehicles by 5%.

Last month, Beijing announced that it would limit new vehicle registrations in the capital city, as well in Shanghai, Guangzhou and Guiyang with a promise to add several additional cities to the list.  The latest announcement, which aims for zero growth takes those efforts a step further.  Indeed, these cities have been targets for automobile manufacturing and sales organizations, not to mention industry suppliers, which will likely be forced to relocate some of their operations.  This morning's Shanghai Dailyreports that Volkswagen AG, General Motors, Toyota Motor, and Ford Motor are already shifting their attention to China's lower-tier cities as sales growth in major cities begins to stagnate. 

The Chinese government is also expected to take steps to increase the cost of new vehicle registrations, which are sold by lottery as the number of new registrations become more and more limited.  The government is also considering the addition of a vehicle congestion tax, likely tolls on highways that experience high volume of vehicle travel and create regional pollution. 

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