Auto sales growth in China could slow to 13-15 percent per year over the medium term as the government ends stimulus measures, said Raymond Tsang, a partner at Bain & Co's Shanghai office.

"The industry is going to look at a pretty massive overcapacity in the medium term. Some capacity will have to be shut down because the global market is not growing," Tsang said in an interview in Shanghai as part of the Reuters Global Autos Summit.

"There is no way that the industry could for a long time sustain this low utilization," Tsang said.

Despite expectations of slower sales growth next year, many car makers are still making bullish capacity projections based on growth rates of 30 to 40 percent, said Tsang, who heads the consultancy's industrial and automotive practice for Greater China.

The industry's annual capacity could reach close to 40 million cars in a few years' time if carmakers push ahead with their targeted expansion plans, he noted.

China's auto industry is highly fragmented, with more than 10 companies controlling two-thirds of the market.

Growing exports

China's fast-growing pool of affluent consumers will fuel growth in the premium car segment, while the compact car market will benefit from Beijing's push to promote economic development in smaller cities, Tsang said.

Meanwhile, the market for mid-sized cars likely will grow at a slower rate as the market for such cars has become more mature, he said.

Tsang predicted exports by Chinese automakers will continue to grow, especially in emerging markets in Latin America, Eastern Europe and Asia, where consumers are more price sensitive.

The industry will likely see tighter partnerships between Chinese carmakers and global players as local automakers take aim at overseas markets, he said.

"These tighter forms of collaboration would help the Chinese automakers to further globalize their business and bring their technology capability up in a shorter period of time," said Tsang, without talking about any specific companies.

Top Chinese automaker SAIC Motor Corp. Ltd. is widely expected to take a small stake in General Motors Co. because it wants to gain access to GM's sales networks outside China, including in Europe, sources told Reuters.

Electric vehicles will be the next bright spot for Chinese carmakers, but it could take a few more years before the sector hits a critical mass that will drive down costs far enough for them to be widely used, Tsang said.

China has said it wants to have 5 million electric vehicles on its roads by 2015.

It expects to have about 200,000 electric vehicles on its roads within the next two years, with about half of that coming from public vehicles such as buses.

"The goal (of 200,000 units within two years) is quite achievable because it's partially subsidized and government-controlled sector, but beyond that to the 5 million units, you have to make a lot more assumptions to make it realized," said Tsang.