GUANGZHOU - Authorities in south China's megacity of Guangzhou announced late Saturday that they will slash the number of new cars hitting the streets to ease the city's traffic jams and cut pollution.

The city government announced during a press conference Saturday night that it will only allow 120,000 passenger vehicles to be registered over a one-year trial period, during which only 10,000 licenses will be handed out per each month.

The new quota system went into effect on Sunday. Car dealerships were packed with customers as residents rushed to buy cars before the quota began.

The city government said it will release a more detailed car quota plan by the end of July.

Traffic jams in Guangzhou have worsened recently. Average speeds during rush hours have slowed to 20 km per hour and are expected to become even slower. Growing motor vehicle emissions have also worsened the city's air quality.

Guangzhou is the third Chinese city to cap small passenger vehicle registrations after Beijing and Guiyang.

In 2010, Beijing started to impose a monthly cap on the issuance of license plates and introduced a lottery system to distribute the plates.

Guiyang, capital of southwest China's Guizhou province, introduced a similar lottery system last year.