The predication was echoed by Zhang Xiaoyu, executive vice-president of the China Machinery Industry Federation.

"The number of passenger vehicles in use in China may rise to 200 million in 2020, which means that each Chinese person may own one-seventh of a vehicle on average by then, a figure barely reaching the current world average level,” Zhang said. “There is still a long way to go to achieve the moderate level of developed countries."

The report predicts that China's auto sales will reach nearly 15 million units in 2010 and approximately 22.6 million units in 2015. Moreover, the yearly demand for passenger cars in China is estimated to reach more than 25.8 million units in 2020, more than 29.2 million units in 2025 and more than 35.2 million units in 2030.

Feng Fei, chief editor of the report and director of the Industrial Economy Research Department under the State Council, said that China's economy is still maintaining momentum for sustained and rapid growth.

According to the "Adjustment and Development Plan for the Auto Industry" released in 2009, the average growth rate of China's auto production and sales volume during the 2009-2011 period must reach at least 10 percent. After the global financial crisis, automakers at home and abroad became even more optimistic about the great market potential yet to develop in China's small and medium-sized cities as well as in the western regions.

Promising hybrid power technology

"Thanks to the mature hybrid power technology, China will likely produce 100,000 hybrid vehicles, 30,000 pure electric vehicles, and 10,000 fuel cell-powered vehicles in 2010," Feng said.

The report estimates the production volumes of the three types of vehicles will reach 500,000, 150,000, and 15,000, respectively, in 2013, and 1 million, 300,000, and 20,000, respectively, in 2015.

Feng explained that there are three major obstacles to the development of new-energy automobile manufacturers. First, relevant technology needs to be further improved compared with the traditional internal combustion engine manufacturing technology. Second, new-energy vehicle manufacturers will face high production costs even if they receive subsidies from central and local governments. Third, China will encounter a bigger infrastructure bottleneck than developed countries. Therefore, the report holds that the relatively mature hybrid power technology will develop rapidly during the 12th Five-Year Plan period.

Focus on automotive electronics

According to Fu Yuwu, deputy head of the editorial committee of the report and standing director-general of the Society of Automotive Engineers, automotive electronics is an industrial discipline and China should attach much importance to automotive electronics research and development so as to speed up its transition from a major manufacturing country of entry-level vehicles to a high-end vehicle manufacturing country.

Chinese automakers still lack the capacity to manufacture vehicles by themselves completely and they have to import key auto parts from foreign countries, resulting in the low prices of Chinese-made vehicles.

Fu holds that domestic automotive electronics enterprises face several challenges such as how to build a solid strategic cooperation between assembly factories and component factories, how to improve the overall strength of the whole industrial chain and how to break the technological monopoly of foreign enterprises.