Domestic sales of passenger cars made in China will exceed 1 million units this year, according to an industry association's latest forecast.
The upbeat forecast is based on the robust sales during the first half of this year, said the China Association of Automobile Manufacturers (CAAM).
Car sales totaled 470,200 units during the first half of this year, an increase of 36.2 per cent from the same period of last year, CAAM found.
Sales in June alone increased by 50.2 per cent year-on-year to 94,700 units. The figure was up 6.5 per cent compared with sales in May.
"Sales during the second half of this year are expected to maintain a strong growth momentum," said Zhu Yiping, an official with CAAM.
Zhu predicted sales in the third quarter of this year would reach 240,000 units, although it is an off season for the passenger car market.
"New product launches and price cuts made by manufacturers in China will continue to significantly boost sales," she said.
More than 10 new car models will be introduced on the domestic market during the second half of this year.
Hainan Mazda, a joint venture between First Automotive Works Corp and Japan's Mazda Motor Corp, will launch their Familia sedan this week for example.
The 1.8-litre Familia will be priced between 150,000 yuan (US$18,100) and 200,000 yuan (US$24,100).
Toyota Motor Corp and Ford Motor Company will also introduce new models into their Chinese joint ventures later this year.
Local Carmakers Slashing Prices
Local carmakers have been slashing prices of their products to expand market share and deal with pressures from tariff cuts on auto imports as a result of China's entry into the World Trade Organization.
The first half of this year saw dozens of price cuts.
The latest action was made by Chang'an Suzuki, a joint venture between Chang'an Motor Corp and Japan's Suzuki Motor Corp, which cut the price of its five Gazelle compact sedans by up to 15,000 yuan (US$1,810) at the beginning of this year.
Su Hui, general manager of the Beijing Asian Games Village Automobile Exchange, said the improved consumption environment will also encourage more consumers to buy cars during the second half of this year.
The Ministry of Finance and the State Administration of Taxation recently decided to cut the consumption tax by 30 per cent on 38 domestically made models which meet the European II emission standard.
These models include the Audi A6 and Bora produced by the FAW Volkswagen between the First Automotive Works Corp and Germany's Volkswagen Group.
Around 27,000 cars were sold on Su's exchange, one of the largest in Beijing, during the first half of this year.
"Economy models will continue to be the main growth engine for passenger car sales during the period," he said.
According to CAAM, sales of cars at a price of less than 100,000 yuan (US$12,000) grew by 60 per cent year-on-year from January to June this year.
Sales of cars priced between 100,000 yuan (US$12,000) and 150,000 yuan (US$18,100) increased by 40.6 per cent during the period.
CAAM statistics showed more than 65 per cent of cars were purchased by private consumers during the period.
Zhu said car imports did not greatly affect the domestic market, although China cut its tariffs from 70 to 80 per cent to 43.8 to 50.7 per cent at the beginning of this year.
China imported 23,500 passenger cars during the first five months of this year, accounting for less than 6 per cent of the total domestic market volume.