Fuel-efficient cars have already shown some signs of overheating, as the demand for auto with displacement less than 1.6 liters was about 3 million units before 2011, less than half of the capacity of 7 million units, said Jia Xinguang, auto industry analyst.
The China Association of Automobile Manufacturers (CAAM) announced annual sales rose 46.15 percent year on year to 13.64 million units (in 2009). Output increased 48.3 percent to 13.79 million units.
Rural consumers got up to 5,000 yuan (735 U.S. dollars) in government subsidies for vehicles with a displacement under 1.3 liters.
The three top-selling brands last year were Shanghai Volkswagen, FAW Volkswagen and Shanghai General Motors -- all joint venture brands between Chinese auto makers and the German or U.S. counterparts.
China's passenger car sales were up 52.93 percent to 10.33 million units, and production was 10.38 million units, up 54.11 percent year on year.
The brisk sales in China is in contrast with the United States where 10.43 million units were sold last year, 2.8 million units less than in 2008, as the global financial crisis kept U.S. consumers out of the showroom.