The average winning bid for a Shanghai car license plate hit 40,518 yuan (5,065 U.S.dollars) at a weekend auction - the second-highest price this year.

The average winning bid for a Shanghai car license plate hit 40,518 yuan (5,065 U.S.dollars) at a weekend auction - the second-highest price this year.

Although there were fewer bidders than usual, analysts said discounts by car dealers increased market demand, prompting car buyers to offer higher prices.

The average successful bid for one of the 6,500 plates for sale this month rose 2,058 yuan from November, according to Shanghai International Commodity Auction Co, organizer of the city's monthly auction.

This month's average price was second-highest to the record of 41,601 yuan set in September.

December's lowest winning bid was 39,800 yuan, an increase of 2,000 yuan from November.

Organizers said 9,477 people placed bids for a plate at the weekend, a significant drop from last month when 11,860 people entered the auction.

"Last month's price rebounded slightly and made people believe there was an upswing in competition this month," said Shen Gang, a salesman at United Auto Trading City in Shanghai.

Car makers, which are struggling to reach their sales targets this year, launched massive price discounts and promotions this month to boost sales before the New Year.

Shanghai is the only city on the Chinese mainland to auction a limited number of car plates to ease traffic and control pollution.

The city sold 65,000 license plates for the entire year, 2,078 fewer than last year. The average winning bid this year was 38,346 yuan, compared with 33,899 yuan last year.