Analysts and carmakers say the mainland's car market will still see up to 10 per cent growth this year, despite fear of more government policies to limit car ownership.
While car sales on the mainland jumped 4.3 per cent last year to 19.3 million units, the growth was only about half the industry's original estimate of between 8 and 10 per cent.
But the China Association of Automobile Manufacturers - a group representing carmakers on the mainland, said carmakers should still see an average growth of 7 per cent this year in light of the improving mainland economy and stabilising fuel prices.
The mainland capped growth in car ownership due to worsening traffic jams and air pollution.
Global car consultant LMC Automotive said that if commercial trucks - which made up less than 2 per cent of the market, were excluded, the growth could even reach 10 per cent.
According to public sales figures released by the top 25 carmakers in China, only 10 lived up to their 2012 sales target. Pang Da Automobile, the mainland's largest car dealer by market capitalisation, said it may lose up to 750 million yuan (HK$923.76 million) for the 2012 financial year. Guangdong Automotive expected net profit would fall more than 70 per cent as a cap on new car registration in Guangdong, an economic slowdown and a territorial dispute between China and Japan had hurt demand.
Foreign carmakers, however, showed no signs of slowdown in their expansion. Hyundai plans to overtake the joint venture between General Motors and SAIC by selling 1.47 million cars this year. SAIC and GM, meanwhile, are expected to raise this year's sales target to 1.45 million in the next two months. All key carmakers are building new plants and finding new partners on the mainland to boost their capacity and share in the world's biggest car market.
New partnerships were seen in the worst-performing commercial vehicle sector, with local car group Dongfeng Motor signing a deal with Swedish truck maker Volvo on Saturday to become the world's biggest truck manufacturer.
Shanghai-based analyst Zhang Yu is not worried, saying the market would naturally correct the problem. "We don't see overcapacity in popular brands such as BMW and Mercedes-Benz. If it were the small, low-quality carmakers that faced overcapacity, it is not a bad thing to put them out of the market."
John Zeng from LMC Automotive said that although the mainland's car market was maturing, demand for new cars should stay high in the next few years.