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Almost 200,000 government cars have been misused for private purposes, the Beijing Times newspaper said, citing the Central Commission for Discipline Inspection.
The agency also recommended that ministries and regions detail the expenses of car costs.
The southern city of Guangzhou adopted a similar plan using Global Positioning Satellite systems in 2011, the paper said. According to the graft watchdog, the city has already saved 42 million yuan, which is around $6.87 million, each year, or 5,000 yuan per car.
Since taking over as Communist Party chief late last year and as the head of state in March, President Xi Jinping has called corruption a threat to the party's survival and vowed to go after powerful "tigers" as well as lowly "flies".
Xi has sought to calm growing public anger at the flamboyant lifestyles of many officials, most of whom are on low salaries. The government has vowed to fight the "four tendencies" of bad cadres, which include "hedonism" and "extravagance".
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.
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