Factory sales of Chinese passenger cars rose 16.8 per cent in January from the same month a year earlier, an industry group reported Friday.

Despite the increase, there were signs that automakers will see weakened demand ahead.

Traffic in Beijing in November. Factory orders for autos in China reached a record 1.5 million in January. (Alexander F. Yuan/Associated Press)

The quasi-official China Association of Automobile Manufacturers said wholesale sales of passenger cars reached a record of 1.5 million last month as dealers restocked following a year-end buying spree.

Still, that was a sharp drop from the nearly 27 per cent increase reported in December, when buyers were rushing to beat the expiration of government buying incentives, mainly for purchases of energy-efficient small cars.

January's shipments suggested dealers were filling showrooms depleted by those surging sales late last year.

Total retail vehicle sales, including large buses, rose 13.8 per cent to 1.89 million units in January, the report said. That compared with an 18 per cent increase in December, to 1.7 million vehicles.

But CAAM suggested the rate might weaken in the coming months due to the expiration of the incentives, although growth is still expected to be in the double-digits.

Automakers already have begun adjusting production, trimming output of all vehicles by 3.6 per cent last month compared with December, to 1.8 million units.

China is the world's largest market. By comparison, light vehicles sales there last year were almost 11 times those in Canada.

With files from The Associated Press