(Yicai Global) Oct. 24 -- Slower growth in China's auto industry probably augurs its future development path, according to a senior government official.

The era of swift growth may be over since the sector cannot maintain a breakneck expansion as its base is already very large, Xin Guobin, deputy industry and information technology minister, said at a press conference yesterday. Vehicle sales reached 29 million units last year, he added.

Production and sales both fell for a third straight month in September, the China Association of Automobile Manufacturers said on Oct. 15. Output slumped 11.7 percent to 2.4 million from a year earlier, while sales dipped 11.6 percent to 2.4 million, its data showed.

Still, Xin is not downbeat on the industry's future. Large numbers of scrapped cars are still being replaced, though large-scale demand in small third- and fourth-tier cities is sure to slow, he said.

To maintain the industry's stable and healthy development through cost-cutting and efficiency gains, the government must encourage automakers to further boost investment in innovation, he added.

The industry has many positive factors for growth, Xin noted, including that the top 10 manufacturers account for 90 percent of sales and income is gaining at a faster clip than output and sales. Core business in the first eight months of the year rose 9 percent, he said. Production rose 2.8 percent in the same period, while sales gained 3.5 percent, according to CAAM's data.

Another positive is the buoyancy of the new energy vehicle sector. Output of NEVs soared 73 percent to 735,000 in January to September, while sales surged 81 percent to 721,000, to lead the world, Xin noted.

Editor: Ben Armour