Chinas car market will undoubtedly be impacted by the rollout of more car-sharing services over the next ten years.

China's car market will undoubtedly be impacted by the rollout of more car-sharing services over the next ten years.

A study by Boston Consulting Group (BCG) suggests that car demand in China will be dented as car-hailing firms grow their presence in China's cities.

The US consulting company predicts the Chinese auto market will shrink 2% each year over the next decade, based on a 5% decline in individual purchases for private ownership and a car-hailing fleet replacement rate of 3%.

It says the decline in demand will mainly be in first- and second- tier cities initially.

The study says that the regulatory environment in China is becoming more favourable for car-hailing services with residents in major cities being encouraged to use mobility services rather than make car purchases.

"The online car-hailing services better meet customers' needs, and will develop to be safer and more convenient under the government's official regulation. Car ownership, on the other hand, is being discouraged by means of restrictions on car purchases and use," said Charley Xu, a principal at Boston Consulting Group, speaking to the China Daily.

Mr Xu said he expects Chinese individual customers' demand to decline 5 percentage points each year, as the younger generation in large Chinese cities have less interest in owning a private car, and customers will find various ways, including chauffeured services, ride-sharing and renting to meet their mobility demands.

"The aim of local governments is to control the number of vehicles on the streets. Even if a congestion charge replaces the local restrictions on car purchase and use, the result will be similar," he told the China Daily.

Xu noted that the newly released regulation on car-hailing services will encourage more drivers to sign up with the car-hailing service companies, and so the fleets will grow.

The China Daily said China's State Council has released a regulation on the car-hailing services that is set to take effect on November 1.

The new rules will support the development of online car-booking platforms and encourage private cars owners to provide ride-sharing services to promote the sharing economy, ease congestion in cities and reduce air pollution.