As China steps up measures to combat its growing air pollution from out of proportions, imposing excessive rates on automotive license plates to encourage residents from buying additional units, local Chinese auto makers are unfortunately being driven to extinction.

"Would you want to put a 100,000 yuan (AU$18,027) plate on a 50,000 yuan (AU$9,014) car?" Martin Kuehl, a spokesman for Audi AG, told the Wall Street Journal.

China, hit by a worse smog early in January, has instituted measures to curb the growing menace which has affected the health of thousands. One of these was either to increase the rates of license plates or auction them off.

Chang'an avenue in Beijing

In Shanghai, one of four major Chinese cities that instituted policies reducing car purchases, a car vehicle plate already costs 82,000 yuan (AU$14,783).

To counter the exorbitant fees, Chinese drivers resort to buying the more expensive and imported models.

"Putting the pricey plate on a more expensive car makes sense," David Fu, a 26-year-old bank corporate finance manager, was quoted by the Wall Street Journal. In June, Mr Fu bought and rewarded himself with an Audi A4 priced at 300,000 yuan (AU$54,074).

An opportunity which luxury unit Jaguar Land Rover finds itself just at the right timing.

According to company data, sales of Jaguar Land Rover in China jumped 11 per cent to 20,427 units in the three months ended June.

Ralf Speth, Jaguar Land Rover chief executive officer, in fact said in May that the company targets to sell 100,000 cars in China this year alone.

Overseas automotive brands such as General Motors believe that car sales would be affected by a measly 2 per cent to 3 per cent even if all of China implements the restrictive car vehicle plate policy.

The same, however, could not be said for local Chinese auto makers.

Victor Yang, spokesman for Hangzhou-based Zhejiang Geely Holding Group, said the growing rates of license plates and the auctions schemes would kill their business. He said Geely models are priced between only 80,000 yuan and 120,000 yuan.