China will produce a record 12m vehicles this year, according to a forecast by the National Development and Reform Commission (NDRC), China’s top economic planning agency.

Domestic auto makers were expected to produce and sell more than 8m vehicles in the first eight months of this year, said Chen Bin, director of the department of industry under the NDRC.

Sales, which slowed last year, have been boosted by the introduction of a government stimulus plan. Sales of China’s domestically-made automobiles totaled 1.09 million units in July, up 63.5% year on year, the fifth consecutive month that saw sales exceed 1m units, according to the China Association of Automobile Manufacturers.

Chen said that government measures to halve the purchase tax on small capacity cars had boosted the development of the country’s small engine vehicle sector. China cut the purchase tax on passenger cars to 5% for models with engine displacements of less than 1.6 litres in January.

However, he warned that the growth pace of China’s auto industry might be slower in following years and there might be risks of over-capacity, adding that domestic auto makers should focus on research and development on energy-saving, environment-friendly new energy vehicles.