China's domestic car market will prove robust in the face of the central bank's decision to raise interest rates, according to regional experts.

The country's automotive market has been enjoying rapid growth in recent years, with the latest figures showing sales of domestic cars grew by 18.4 per cent year-on-year for the first nine months of 2004.

However, with the rate starting to slow down, concerns have been aired that a period of stagnation could be imminent, particularly in light of the interest rate rise on one-year yuan loans to 5.58 per cent from 5.31 per cent.

The China Association of Automobile Manufacturers said today that it did not expect this to happen, with spokeswoman Zhu Yiping saying the impact would be negligible.

"We have not seen impact of the rate rise as it is very small. The domestic car market maintains a stable track," she told China Daily.

Qian Pingfan, an industry researcher of the Development Research Centre of the State Council, agreed, saying the rate increase would "not have a big impact on the domestic car market".

It is estimated that around ten per cent of new car sales in the country are funded through loans.