Despite slack auto market in the latter half of 2004, China is expected to churn out more than 6 million cars in 2005, 20 percent more than last year, replacing Germany as the 3rd largest manufacturer of motor vehicles, Zhang Xiaoyu, vice-president of the China Federation of Machinery Industry (CFMI), said Saturday in Beijing.

China's auto market expansion was slowed down last year due to speculation that auto prices will be further reduced, Zhang said. "The market potentials have been delayed, which does not mean the lack of market demand."

In 2004, domestic manufacturers turned out 5.0705 million motor vehicles, and sold 5.711 million entire car units, representing increases of 14.11 percent and 15.50 percent respectively compared with 2003.

As prices are down to the lowest possible level this year, auto sales will finally pick up its momentum, Zhang said, predicting that the increase could be up to 20 percent.

Wang Qing, a researcher with the Market Economic Research Institute of the State Council Development & Research Center, holds a similar view.

"Price fluctuation of automobiles this year will be less volatile, because profit margins are reaching bottom low and overstocking pressure greatly eased," he said.

Industry insiders also predicted that the growth market for domestically manufactured motor vehicles may just be outside China.

CFMI vice-president Zhang Xiaoyu said that Chinese cars with a price tag at 5,000 US dollars are highly competitive in the world, especially in southeastern Asian countries, and the 10,000-US-dollar cars may also have a larger slice of the world market share.

According to CFMI figures, China exported a total of 90,000 entire cars last year, 140 percent more than in 2003.