"It's still a quite healthy demand for passenger vehicles," Paur told AFP. "Overall, this paints quite a good picture for development in the China market."

Japan's top three automakers – Nissan (IW 1000/26), Toyota (IW 1000/8) and Honda (IW 1000/23) -- said this month that annual sales in China fell last year due to a consumer boycott after Tokyo nationalized islands also claimed by China.

The association said Japanese brands -- not including imports -- accounted for 16.4% of total passenger car sales last year, down from a market share of 19.4% in 2011.

But other foreign auto makers have filled the gap, helped by stronger brand recognition than local players and perceptions of better quality.

GM Sets New Record in China

U.S. auto giant General Motors (IW 500/4) has tipped its full-year sales in China for 2012 to set a new record by surpassing the 2.55 million vehicles it sold in 2011.

Cui Dongshu, deputy secretary general of another industry group, the China Passenger Car Association, forecast passenger car sales would grow at least 10% this year.

"The environment will get better this year as the new leadership will likely announce fresh policies to stimulate the domestic economy, but there's also risk of more restrictions on car purchases," Cui told AFP.

Global management consulting firm McKinsey has forecast growth in China's passenger car market will slow to an average 8% annually from 2012 to 2020 as consumers' tastes change.

The Chinese passenger car market grew an average 24% annually between 2005 and 2011, it said in a report last November.

Copyright Agence France-Presse, 2013