China's sedan output in the first eight months reached 1.24 million units, including 169,400 units in August.

The figure was higher than last year's total output of 1.09 million units. However, analysts believe auto production may slow down in the next few months as carmakers begin to deal with a rising inventory.

The National Bureau of Statistics said Tuesday that August saw a 63.2 percent year-on-year rise in auto output, although the volume dropped by 1,500 units from July.

The bureau also pointed out that by the end of July, Chinese auto companies' sedan stock hit a record 60,000 units.

"The stock usually hovered between 20,000 and 30,000 units in the past. Domestic firms will have to slow down production soon," said Yale Zhang, an analyst for Auto-motive Resources Asia Ltd.

But he also said the inventory was not a serious problem given the strong demand. Car sales stayed at a relatively high level of between 160,000 and 170,000 units a month.

"Sedan demand is still strong in China, and customers sometimes have to wait a long time to get some special type of cars," he added.

The statistics bureau said that sedan output is expected to exceed 1.8 million units this year. The boom in sedan production will likely push China's vehicle output past 4 million units.

Last year, China realized vehicle output of 3.48 million units, up 36.5 percent year-on-year.

"Our analysts in North America forecast that China will become the world's No 4 vehicle maker next year. It will climb to No 3 in 2006 and secure second place (after the US) in 2013," Michael S. Flynn, Director of Office for the Study of Automotive Transportation under The University of Michigan, told Shanghai Daily while on a tour of Shanghai.

"It is a great opportunity for China to develop the industry, when the global auto sector is trapped in a mire," Flynn said.

He pointed out that low labor costs and a huge market potential are major factors driving the auto industry's fast development in China.

"However, low labor costs cannot last long as the industry continues to develop and more and more high-level employees are needed.

"Chinese firms should pay special attention to designing their own car models, instead of being satisfied with assembling cars for foreign brands," Flynn said.

The government plans to raise technical standards for the country's auto industry. China will also impose higher taxes on assembly cars to encourage production of home-made autos.

(Shanghai Daily September 17, 2003)