China's vehicle sales are expected to rebound despite a decline in February due to the effect of the Spring Festival, the country's top auto industry association said last week.

Data from the China Association of Automobile Manufacturers showed that China's auto sales reached 1.58 million units in February, down 19.9 percent year-on-year and 35.1 percent month-on-month.

Chen Shihua, deputy secretary-general of the CAAM, said the Spring Festival reduced working days and some car demand had been released before the holiday that ran from Feb 10 to 17, which mainly led to the decline of sales and production in the month.

February's auto production was 1.51 million units, down 25.9 percent compared with same period of 2023.

However, both passenger and commercial vehicles maintained stable operations, and new energy vehicles and automobile exports continued to show strong figures for the duration of January-February.

In this year's Government Work Report, there is a focus on strengthening and expanding the leading position of industries, like intelligent connected vehicles and new energy vehicles. With policy refinement and implementation, it is expected to sustain and expand the stable growth trend in the automotive sector, Chen said.

The China Automobile Dealers Association noted that post-Spring Festival period is a key time for new product launches in the auto market. With national policies and regional consumer incentives coupled with the recovery of offline events like auto shows, overall car sales are anticipated to rise.

Car sales rose 11.1 percent year-on-year to 4.03 million units during the first two months of this year and production increased by 8.1 percent to 3.92 million units, according to the CAAM.

The majority of them, passenger cars, sold 3.45 million units in the period, up 10.6 percent year-on-year. Commercial vehicle sales increased by 14.1 percent to 575,000 units.

The NEV sector maintained momentum during the first two months with sales jumping 29.4 percent year-on-year to 1.21 million units. The sector accounted for 30 percent of total auto sales during the period.

Auto exports amounted to 822,000 units during January-February, an increase of 30.5 percent year-on-year.

In particular, Chinese brands collectively sold 2.07 million passenger vehicles in the first two months, a year-on-year growth of 26.7 percent. Their market share reached 59.9 percent, up 7.6 percentage points compared with same period last year.

Chen said that is thanks to the rapid growth of NEVs and auto export. He forecast that the market share of Chinese brands will continue to grow by 2030.

UBS China predicts that Chinese brands will seize a 63 percent market share in 2024.

Among major foreign brands, only South Korean ones experienced double-digit growth in sales in China during the January-February period. The sales of German, Japanese and American brands showed varying degrees of decline.

"Since last year, the domestic passenger car market share has been steadily growing and it has further increased on the already high base this year, highlighting the pressure faced by joint venture brands," Chen said.

Japanese newspaper Nikkei reported last week that Nissan and Honda are considering cutting production in China. Nissan may lower annual production in China by as much as 30 percent, or about 500,000 cars, while Honda is considering a 20 percent cut to around 1.2 million vehicles.

Nissan operates eight factories in China through a joint venture with Dongfeng Motor. Honda operates four factories in China through a joint venture with GAC Group and three other factories through another joint venture with Dongfeng.