According to the Beijing Times, as cited by Reuters, the Communist Party's Central Commission for Discipline Inspection estimated that almost 200,000 government cars were being misused by officials; recommending ministries and regions to utilise the GPS systems in order to track car expenses.
The graft watchdog also cited the example of Guangzhou in 2011, who adopted a similar system and saved up to 42 million yuan ($6.87 million) each year in oil and maintenance fees.
The crackdown is part of an anti-graft drive led by President Xi Jinping, who has vowed to go after powerful "tigers", as well as lowly "flies", since taking over as Communist Party chief late last year and as the head of state in March.
Xi has sought to calm growing public anger at the flamboyant lifestyles of many officials, listing "four tendencies" of bad cadres, including "hedonism" and "extravagance".
Last year, the Chinese government ordered all officials and departments to not purchase locally made cars. In early February 2012, the Chinese Ministry of Industry and Information Technology posted a list of 412 vehicles that were approved for government purchase, taking off popular foreign brands such as Toyota, Volkswagen and General Motors.
And in June 2012, the government also demanded officials to auction off any remaining luxury cars in order to boost local revenues.
According to Yale Zhang, head of Shanghai-based consulting firm Automotive Foresight, the Chinese government spends between 70 billion and 80 billion Yuan ($11.1 billion to $12.7 billion) each year on government-vehicle purchases.
On Wednesday, the Communist Party's anti-graft watchdog also reported it had carried out a secret investigation into cadres who used public funds over last week's National Day holiday to stay at rural bed-and-breakfasts.