China has seen a decade of nearly non-stop annual sales growth of 30 percent or more as rising income levels fuelled by the fast-growing economy spurred a surge in private car purchases, beginning in big cities on the nation's shores.

China's 2010 auto sales rose more than 32 percent to 18.06 million units, following a banner 2009 in which the country overtook the United States as the world's top market.

But sales growth is widely expected to fall to half that or less in 2011 after China ended last year by removing subsidies on small-engine cars that had helped it zoom past the US market.

Reflecting fears that the days of unbridled car-buying may be over, city authorities in Beijing have also unveiled new measures that will drastically cut the number of new car registrations in the congested and polluted capital.

Nationwide sales could slow to around 15 percent this year, but second-tier cities could provide an avenue for growth, said Klaus Paur, head of automotive research for Greater China at Synovate Motoresearch.

"We still have a very strong pent-up demand in the lower-tier cities," Paur told AFP, referring to smaller inland cities that despite being less known abroad are home to tens of millions of people with growing buying power.

"In the inner provinces particularly, a lot of households are getting over the threshold of being able to afford a car for the first time. I still see strong growth despite the fact we have subsidies running out," he said.

Companies such as Nissan and General Motors -- the market leader with a record 2.35 million vehicles sold in China in 2010 -- have launched less expensive brands aimed at consumers in smaller cities, he said.

GM's Baojun, a new affordable passenger vehicle produced with partners Shanghai Automotive Industry Corporation Group and Wuling Motors, is due to go on sale early this year through a new network of dedicated dealers.

The compact Nissan March, aimed squarely at the emerging middle class in China's smaller cities, has had strong sales since its debut last year.

The government-affiliated China Association of Automobile Manufacturers has forecast nationwide sales and production to grow at a steadier pace in 2011 between 10 and 15 percent.

J.D. Power and Associates, meanwhile, expects "a more moderate" 10-11 percent growth this year as the impact of the stimulus incentives wear off, said Jenny Gu, a Shanghai-based analyst for the company.

Lower-tier cities are becoming increasingly important as Beijing, Shanghai and other major metropolises near their saturation point for demand, she said.

First-time buyers looking for economy or family cars will make up 90 percent of demand in smaller cities, while larger cities will see more second-time buyers acquiring luxury cars and sport utility vehicles, she said.

Beijing's slashing of new plate registrations is not expected to have a major impact on China's total sales as the capital accounts for only three to four percent of national sales.

But it could have a knock-on effect if other major cities coping with crippling gridlock and pressure from the central government to reduce air pollution adopt similar measures.

Gu said Beijing "is an example for other large cities who are also suffering from traffic jams or other problems brought on by the high vehicle population."

This year will be a time for municipal governments to improve road systems to deal with the auto boom and for manufacturers to adjust after two years of extraordinary growth, said Shen Jun, an analyst with consultancy Roland Berger.

Volkswagen Group China has said it will start its largest-ever investment in the country in 2011, pouring 10.6 billion euros ($13.7 billion) over four years into expanding plants and developing new products.

Although growth may slow, sales of new cars will remain huge, Shen said, adding that "15 percent is not a small number" for growth when the size of China's market is considered.

"The base is very large," Shen said.

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