Guangzhou, Guangdong's provincial capital, is to introduce a new system for granting new car license plates, starting August, split between lottery, public auction, and environmental friendly considerations.

The southern metropolis started limiting car registrations in July, meaning no more than 120,000 new car license plates are issues per year.

According to Xian Weixiong, director of the Guangzhou Commission of Transport, the city will now grant 12,000 car license plates to new energy and environmental friendly cars via lottery, have a lottery for another 60,000 and auction off the other 48,000 by July of 2013.

"Granting 10 percent of new car license plates to new energy and environmental friendly cars which have been listed by the Ministry of Industry and Information Technology shows the city government is serious about its efforts to curb its worsening air pollution and develop an environmental friendly city," Xian said.

He promised that the money raised from auctioning off car license plates will be used only to develop the city's public transportation system in future.

He added that 88 percent of the car licenses will be granted to local residents and the remaining 12 percent to government departments, organizations and companies.

The new plan was approved by the city government on Monday while the first round of lottery and public auction will be organized for August 27, added Xian, who is also deputy chairman of Guangzhou Committee of Chinese People's Political Consultative Conference.

Guangzhou is the fourth city to limit car registration on the Chinese mainland, after Beijing, Shanghai and Guiyang, capital of Southwest China's Guizhou province.

According to data from the city's traffic police department, Guangzhou — which has a population of more than 16 million — had 2.5 million registered cars at the end of June.

An average of 3.3 cars have to compete for or share a parking place due to the shortage of parking places.