Carmakers, recognising that China is plagued by environmental problems and has to conserve energy, are increasingly focussing on "green technology" to increase their market shares in the ferociously contested growth market.
Both local and international manufacturers intend to introduce environmentally friendly technology to visitors at the Shanghai Auto Show, which starts on Sunday and will continue through April 28 under the motto "Technology and Nature in Harmony."
General Motors, Toyota, Mercedes-Benz, BMW and Ford will be showcasing their battery-powered and hybrid models.
Germany's Volkswagen will present for the first time the entire palette of its environmentally friendly technology at a car exhibition in China.
In this respect, the company intends to be a "vanguard" and has pledged to decrease petrol consumption and emissions from Volkswagen vehicles sold in China by more than 20 per cent by 2010.
"Environmental protection is a global issue," Winfried Vahland, Volkswagen China's director, said ahead of the show.
"Since the Chinese car market is growing rapidly and already ranks number two worldwide, Volkswagen Group of China takes its responsibility as market leader very seriously," he added.
China's increasing road traffic contributes to smog in the country's mega cities. About 2,000 new cars are currently registered every day in the capital Beijing, causing traffic jams daily.
"Further improvement of the existing infrastructure will be critical for any further development because even presently, the country's mega cities are fighting against daily traffic gridlock," said Nick Margetts of the marketing research firm Jato Dynamics in Limburg, Germany.
Industry experts estimated that the country might become the world's top automobile market by 2020.
A booming economy, increasing prosperity and falling car prices have boosted demand. Among car-manufacturing countries, China holds place three today, and the government has declared car manufacturing a key industry.
The Chinese Association of Automobile Manufacturers recently reported that 7.28 million cars rolled off Chinese assembly lines last year, an increase of 27.32 per cent from 2005. The industry's net profit also soared 46 percent to about $10.5 billion.
The trade ministry announced that car exports were expected to climb to 70 million vehicles per annum by 2010. However, Chinese exports of cars and car parts now account for less than one percent of the global total.
China's domestic market also remains underdeveloped despite all the expansion plans. Only one in 100 Chinese owns a car while the global average is 12 per 100 people.
"The country's automobile industry still remains in its infancy," Margetts said.
Local manufacturers like Chery, Geely or Changfeng are gaining ground.
"Considering the quick learning ability of China's car industry, many foreign brands can expect to come under heavy pressure in the near future," Margetts said.