The government hasn't said whether it will extend the rebate into next year. It was continued this year at the request of Chinese manufacturers, said Xiong Chuanlin, the association's assistant secretary-general.

"I doubt the tax cuts will continue," Xiong said last week in Beijing. "We don't think it's appropriate."

The government aims for local automakers, including Geely Holding Group Co and BYD Co, to account for more than 40 percent of the market for cars, multipurpose vehicles and sport-utility vehicles, according to a stimulus strategy released in March 2009.

They now make up 31 percent, said Gerwin Ho, a Hong Kong-based analyst for Citigroup Inc.

"You have some policy withdrawal and that's going to slow down car sales," Ho said of the overall market.

BYD, which is backed by Warren Buffett, has sold the most cars among domestic automakers this year, according to association figures. Its F3 sedan, China's best-selling vehicle, comes with a 1 liter or 1.5 liter engine and is priced from 59,800 yuan.

"The tax-cut incentives definitely played a part in its popularity," Tong Wei, a BYD salesman in Shanghai, said of the F3. "Its sales are likely to dip next year when the subsidies are removed."

BYD spokesman Paul Lin didn't respond to e-mails or calls seeking comment. The company's stock is down 39 percent in Hong Kong this year, compared with a 3.4 percent increase in the city's benchmark Hang Seng Index.

GM, Ford and Nissan are among the foreign automakers introducing smaller cars and expanding into China's interior to compete with domestic companies.

GM, the best-selling foreign automaker in China, said sales are up 33 percent through November over a year ago and may reach a record 2.3 million in 2010. The Baojun model is set to go on sale early next year through more than 100 dealers.

GM, which raised $23.1 billion in an initial public offering last month, said the Baojun line is meant to be affordable. It didn't announce the price. Sales growth the past two years has been "extraordinary" and should be 10-15 percent next year, GM China President Kevin Wale said.

(China Daily December 18, 2010)