The Chinese automotive industry is continuing to expand, despite indications that demand in the market is slowing down.

New figures from the China Association of Automobile Manufacturers, available through a number of state media outlets, show that the country produced more than three million vehicles in the first seven months of this year.

The statistics represent a 23 per cent increase over the same period last year, underlining the potential in the world's fastest growing automotive market.

However, analysts say that the rate of sales is now expected to slow, with output likely to drop over the coming years.

It is thought that many potential buyers will delay purchasing new vehicles as prices fall.

Recent figures from the national statistics bureau suggested that the scaling down of the rapid growth in the Chinese auto industry may also be a result of government lending curbs.

The theory runs that car sales are slowing because the government's current policies make it harder for consumers to obtain loans.