The 2019 Shanghai auto show is underway in Shanghai, April 16, 2019. The 18th Shanghai International Automobile Industry Exhibition is open to the media on Tuesday and Wednesday, before opening its doors to the public from Thursday until April 25. The exhibition has attracted more than 1,000 exhibitors from 20 countries and regions worldwide, according to organizers. (Photo: China News Service/Zhang Hengwei)

The next phase of China's automotive market will be characterized by intense competition as a wide variety of auto brands battle to attract more savvy consumers, a report released by consulting firm McKinsey & Company said on Wednesday. 

The report said that despite recent auto economic slowdown, the outlook for China's auto market in the coming years remains encouraging. 

The assessment was based on the relatively low penetration of cars, and strong sales of premium, new-energy and used vehicles, the firm said.

China's automobile production and sales have declined for 13 consecutive months from July 2018 as a result of downward economic pressure. Production and sales fell more than 10 percent in the first seven months of 2019, making the auto industry the only major manufacturing sector that witnessed a marked decline in China, according to the Ministry of Industry and Information Technology (MIIT).

China's car parc, or the number of vehicles running on roads per 1,000 people, is now 173, which is less than half of other developing markets such as Russia (373), and substantially behind the developed markets such as the US (837) and Italy (695). 

There is also plenty of space on the roads for the one billion people in China who have yet to purchase a car, as China maintains one of the lowest global ratios of car ownership per kilometer of highways, the report said. 

McKinsey's new survey of 2,500 consumers in 20 major Chinese cities also indicates that Chinese consumers still look for the convenience, safety and experience of being behind the wheel. More than 60 percent of respondents said they wanted to buy a vehicle because car ownership guarantees that they will be able to meet their daily travel needs. 

However, competition for consumer attention is intensifying as passenger car sales become increasingly concentrated among nine leading automotive brands, which collectively account for an estimated 54 percent of car sales in the first half of 2019. 

Moreover, the report said that the majority of Chinese consumers have just two or three brands in mind when they set out to buy a vehicle, and that 62 percent of sales are sourced from this small pool of initially considered companies.