Chinese car producers need to increase the pace of consolidation in the industry, according to a leading Asian bank.

A report by the People's Bank of China, said consolidation amongst the Chinese industry needed to pick up pace in the light of a market oversupply, tough competition and falling margins.

The report, quoted by Chinese newspaper The South China Morning Post, said that growth in vehicle sales had declined. Revenue growth in the industry had also fallen to 8% last year from 45.7% in 2003. The bank added that investment, however, had continued to rise - doubling in four years to a CHY100bn (US$12.4bn) last year.