(Yicai Global) April 12 -- China’s vehicle production and sales both advanced in March from the year before, but the auto industry has a challenging time ahead as demand remains sluggish and carmakers struggle with increased pressures, according to an industry body.

China’s car output surged 15.3 percent last month from the same period last year to 2.6 million units and sales soared 9.7 percent to 2.5 million autos, according to figures released by the China Association of Automobile Manufacturers yesterday.

But in the first quarter, manufacturing slumped 4.3 percent to 6.2 million autos and sales tumbled 6.7 percent to 6.1 million units, CAAM said.

The auto industry came under big pressure in the first three months due to new energy vehicle price cuts which unsettled the market, CAAM said. Governments at all levels should continue to roll out more policies to spur auto consumption and stimulate a tepid market, it added.

The auto industry faces a very stiff task to steady growth as the consumer market remains sluggish, domestic demand is still suppressed and companies are under huge operating pressures, CAAM said.

Overall, the Auto Climate Index tumbled 22 points in the first quarter from the previous quarter to 34, and is now operating in chilly ‘blue lamp’ territory, said Yang Qian, director at CAAM's department of industrial research.

China’s economy still doesn’t have a firm foundation for recovery and is facing triple pressures from faltering demand, supply disruptions and weak expectations, CAAM said. An uncertain external environment means that other unexpected factors could arise at any time.

However, on the bright side, electric cars maintained strong growth, CAAM said. Output in March soared 44.8 percent year on year to 674,000 units and sales jumped 34.8 percent to 653,000 autos. While production in the first quarter climbed 27.7 percent to 1.7 million units and sales surged 26.2 percent to 1.6 million. NEV market share increased to 26.6 percent in March and 26.1 percent in the first three months.

Editor: Kim Taylor