New cars in China in the month of January showed a significant increase of 9.3 percent from the previous year as demand surged due to the Lunar New Year holiday celebration.

According to a statement from state-run China Association of Automobile Manufacturers on Friday, the month of January saw a robust growth of sales in new cars with 2.23 million vehicles; ranging mostly from sport-utility vehicles and sedan to minivans. While overall vehicle sales including trucks and buses also hiked 7.7 percent to 2.5 million.

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Usually, the month leading to the Spring Festival marks the peak sale season in the country's automobile industry, as Chinese shoppers splurge on big items.

According to analyst Boni Sa with consultancy firm IHS Automotive, for a market that annually sells over 20 million units, the growth is not bad. Boni believes that in the next few months, the country's economic slowdown will affect client's confidence to buy new cars and moderate sale is likely anticipated.

Thanks to government's incentive program, such as halving the 10 percent tax of small cars, the Chinese automobile industry has bounced back from last year summer's contraction. Furthermore, IHS anticipates that this year, new car sales will increase to 6.3 percent, and passengers-carrying vehicles will rise to 7.8 percent at 22.76 million in 2016.

Many car manufacturers in China reported solid sales gains last month. General Motors Co. and partnering companies sold 421,000 units, up by 7.3 percent from last year. Meanwhile, Volkswagen AG, including the Volkswagen brand, Audi AG and Porsche Group, posted a 14 percent increase from last year at 400,100 units. Also, Toyota Motors Corp. reported selling 125,000 vehicles, a 32 percent rise.

Almost all of the manufacturers have revealed that they are increasing their Chinese investments. This year, China will likely expect 13 new car models from GM. Ford, on the other hand, plans to add a total of $1.8 billion until 2020 to cater to China's demand for smartphone connectivity and driverless vehicles. After over 10 years of selling its imported units, Renault SA is also set to begin producing its Kadjar SUVs in the country.

In terms of market share, Chinese car brands have the lion's share at 45.5 percent, up from 42.4 percent in December 2015, while German brands increased from 15 to 20 percent. On the other hand, US and Japanese brands dropped from 12.8 to 12.1 percent and from 17.4 to 13.4 percent, respectively.

Tagscar sales, china, General Motors, Volkswagen AG, Toyota Motors Corp., automobile industry