Ratings company Fitch has warned the automotive industry that China’s car market is entering a new phase with annual sales volume growth slowing to mid-single digits over the next decade due to slowing demand. In a note it said that slowing demand in top-tier cities will be the result of a maturing market and a “rebalancing” in China.

Fitch also said that a shift in regulatory focus toward the development of new-energy vehicles and wider restrictions on the number of vehicles allowed on the roads are also contributing factors to the demand slowdown.

Fitch said it expects China's passenger vehicle density to rise to around 150 to 200 vehicles for every 1,000 people from around 80 vehicles currently. "China's domestic auto makers, both Chinese-foreign joint ventures and indigenous brands, will face intensifying competition in the world's biggest passenger vehicle market with product, pricing and marketing strategies becoming increasingly important differentiating factors for success," it said.