Car sales in China experienced its fastest growth rate in three-and-a-half years last month, thanks to the country's tax break on small engine vehicles and comparatively slow growth rate in the same timeframe in 2015.

The China Association of Automobile Manufacturers said on Friday that both international and local car makers delivered an estimated 1.6 million cars to dealers in July, up by 26 percent from the same period in 2015.

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According to The Wall Street Journal, July marks the third consecutive month auto makers in China saw a double-digit rate growth. It is also the strongest rate since January 2013.

"Last July was so low it was right after the stock disaster of late June," Yale Zhang, managing director of Automotive Foresight, said. "July and August [last year], no one wanted to buy cars."

In October, China implemented a tax break, reducing the purchase tax on small car units with engines of 1.6 liters and below to five percent. The tax cut saw a desirable outcome in the first seven months of this year, with auto makers selling up to 12.65 million units, up by 11 percent from a year earlier.

However, with the tax break about to expire at the end of this year, industry experts are questioning if the rebound will continue. Many have voiced concerns about whether the tax break will pull future demand forward since buyers are rushing to take advantage of the tax break.

"We are concerned that pre-buying could cause a meaningful pull back in demand in the first half of 2017," Robin Zhu, Sanford C. Bernstein's analyst, said.

Tagscar sales