According to statistics from the China Association of Automobile Manufacturers, both China's car sales and output surpassed 10- miliion in the first six months of this year.
Sales grew by 12.3 percent year on year while output surged by 12.8 percent year on year.
Chen Shihua, is director at the Information Department of CAAM.
He says the growth of car sales and output is higher than expected.
"This year China's automobile sector had a good start. The growth of auto sales and output in the first quarter outpaced 10%. Although the growth of output in June is 9.3%, a little down, the growth is relatively stable in the overall first half of the year."
A report by CAAM and the Nielsen Market Research Company shows third and fourth-tiered cities are set to become the new engine for China's automobile market growth.
Young consumers, especially the post-80s and post-90s generations are expected to become the new purchasing force.
However, some insiders say they are not optimistic about the future of domestic cars due to new curbing policies on purchasing cars in some mega-cities.
According to statistics, domestic cars have been marginalized, with domestic car market shares having dropped by half in Beijing, Shanghai and Guangzhou.
Shi Jianhua, deputy secretary at CAAM, says the restrictive policy has pushed up the cost of buying cars.
"With the restrictive policy in place, such as in Beijing and Shanghai, consumers tend to buy large vehicles with powerful engines, as well as high-priced imported cars. Take Beijing for example, the average price of cars is up 88% after the policy. The market share of car with 1.6 liters engine and smaller than 1.6 liters has dropped by 17%. "
Shi Jianhua says eight more cities, including Tianjin, ShenZhen, Huangzhou, and Chengdu are likely to announce policies this year to curb the purchase of private cars.
The move is expected to have a significant impact on the development of domestic cars.
"If the eight cities implement the policy, local auto sales may drop by around 25, amounting to around 400-thousands cars. It will account for 2% of the auto output in the whole year. "
Shi is advising the government to respect the market economy principle and take a cautious attitude about introducing new curbs.
For CRI, I'm Xie Zhao.
