China's auto industry officially started in 1955 when First Auto Works, or FAW, was established in Changchun, Jilin province. That year, it produced 65 trucks. Even 30 years later, in 1985, China produced 443,000 units - about one week's production volume in the United States for the same year.

Typically at that time, automobiles were regarded as "production goods" instead of "consumer goods". Although China established two auto joint ventures - Beijing Jeep and Shanghai Volkswagen - in the mid-1980s, there were no individual purchases.

Notably, the retail price of the VW Sanata-B2 was around 200,000 yuan in 1985, when a seasoned worker or an engineer drew a typical monthly salary ranging from 30 to 50 yuan.

Nevertheless, the famous "market in exchange of technology" policy saw the establishment of more joint ventures in the 1990s, including FAW-VW, DPCA, Changan Suzuki, Guangzhou Honda and Shanghai GM.

Production volume began to pick up steadily after 1985, and by the end of 1992 it finally exceeded 1 million units. China joined the World Trade Organization in 2001 and to compete with imported products, car makers launched more locally produced models and started to lower retail prices to more affordable levels. As a direct result, the car market surged in 2002 and 2003 by 62 percent and 83 percent.

Seeing the boom after 2002, many other international majors formed joint ventures in China, including Toyota, Nissan, Mazda, Hyundai, Mercedes, BMW, Ford and Fiat-Chrysler.

It took China 37 years to hit the 1 million unit mark by 1992, and then another 8 years from 1 million to 2 million units. After 2001, China's auto industry began its astonishing journey of average 1.5-1.6 million incremental volume per year. By 2009, China surpassed US auto production and sales, and became the No 1 market in the world, with sales of 13.8 million automobiles.

Also after 2002, China's new local brands emerged with Chery, Geely, Great Wall and BYD competing at the low end and quickly capturing a sizeable market share.

In 2015, China produced and sold 24.5 million automobiles, almost 7 million more than the second-largest market, the US, and the market is still growing at around 1 million units per year. China's vehicle penetration hit 98 units/1,000 people by 2015, still much lower than 800 vehicles/1,000 people in the US.

Though the vehicle population in coastal large cities has become saturated, more inland consumers can afford passenger cars and it is expected that the market will still grow at 5-6 percent in the next five years.

The author is managing director of Automotive Foresight (Shanghai) Co Ltd.