After stagnating for several some months, car sales in the domestic market jumped an annual 9 percent in the first half of the year. Domestic auto sales topped 2.7 million units during the period. Meanwhile, the entire industry churned out 2.8 million vehicles, a 5 percent rise over the same period year.

The sales of sedans accounted for more than 95 percent of the total. Factors such as energy efficiency and high security are rising to the top of the list when consumers choose their models. Some 12 thousand-economy cars were sold in the first six months, taking up over 50 percent of domestic sales.

Fu Yuwu, Secretary-General of China Automotive Engineering Society, noted that the sales of energy efficient cars increased dramatically in the first half. It indicates that the market is following the government's regulations on energy saving, security, and environment protection.

Meanwhile, Experts warn that the supply in the domestic auto market may exceed the demand in the second half of this year. The increase of sales for the first half was partly due to price cuts of Chinese made cars. But some problems still exists, such as production capacity surplus and restrictions on the development of the auto industry.

There's no doubt the Chinese auto market will continue to develop in the next 10 to 20 years. But it will also result in oversupply, which in turn will push the prices down and turn up the competition.

Su Hui, General Manager of Beijing Asian Games Village Auto Market said: "The profits the automakers posted for the first half decreased 50 percent over the same time of last year."

Many retailers are not actually making profits from the sales, but are instead profiting from the car maintenance services. Currently profits from after-sales service accounts for 72 percent of the total. But experts say, when customers realize they are spending huge money on car maintenance, they will lose enthusiasm for buying cars.

(CCTV.com July 25, 2005)