(Yicai Global) May 28 -- China's southernmost tier-one cities of Guangzhou and Shenzhen will gradually ease restrictions on car license plate applications to provide stimulus to the auto market. 

The Guangdong provincial government included simplifying registration procedures and second-hand vehicle sales in its latest policies. It will accelerate the construction of charging facilities for new energy vehicles and bolster the supervision of vehicle sales and maintenance.

The two cities began to limit excessive growth of automobile inventories via a license plate quota in 2012 and 2014, respectively. Consumers must apply for local plates by a lottery system or auction. The quota dictates only 120,000 new private plates are issued every year in Guangzhou and 100,000 in Shenzhen.

Sales from car dealerships in Guangzhou have slowed considerably since the quota was brought in, an industry insider told Yicai Global. The new policies will lower barriers to acquiring plates and simplify second-hand trading procedures, which will spur on consumers to replace their old cars and drive new sales, he said.

Guangdong province was home to an inventory of 21.2 million vehicles last year, up 1.72 percent annually, according to official data. Guangzhou, Shenzhen, Foshan and Dongguan are major auto markets with their combined inventories making up around half of the province's total.

China's auto market recently recorded its first output and sales contractions in 28 years as the market is becoming saturated. Sales fell 14.7 percent to 6.8 million passenger cars in the first four months, according to statistics from the China Association of Automobile Manufacturers.

Editor: William Clegg