Beijing city transport authorities are launching a new performance assessment system for the city's taxi companies, and those who fail the test three years in a row will have their operating licenses withdrawn, the Beijing Times reported on Thursday.

According to the new system, which was announced by the Beijing Commission of Transport on Wednesday, taxi companies in the capital will be graded on 16 criteria, including the turnout rate of their taxis, traffic violation rates and the use of phone and mobile hailing systems.

Once a year, the taxi companies will be sorted into four categories based on their performance.

Those that are judged unqualified or placed in the fourth category in their first year of assessment will have their operating quotas reduced by 10 percent.

If they repeat their poor performance for a second year, quotas will be reduced by 50 percent. A third year will see their licenses canceled altogether.