The association estimated that the possible restrictions might cut vehicle sales by 400,000 units a year, equivalent to 2 percent of total domestic sales.

In Beijing the quota policy has dampened the market.

In the first half of this year, new car sales in the capital city totaled 279,400, a small decrease from the same period last year when 281,200 vehicles were delivered.

Car sales nationwide grew by 12 percent in the first six months.

Yan Jinghui, assistant general manager of the Yayuncun Automobile Trade Market, the largest in Beijing, said it is unlikely 600,000 new cars will be sold in the city this year.

Different from Beijing's lottery system, Shanghai auctions license plates to control sales. Driven by strong demand, the price of a new car plate in the city reached a peak of 90,000 yuan in March - the cost of a new Volkswagen Polo, which makes it hard to find buyers for cars in that price range.

To cool bidding, a price ceiling was enacted by the municipal government in April. Last week, it also decided to shorten the auction time from 90 minutes to an hour.