Economic Planenr

The nation's top economic planner, the National Reformand Development Commission, raised fuel prices by 600yuan to 9,980 yuan per metric ton for gasoline and 9,130for diesel fuel on March 20 following continuing increasesin the cost of crude oil.

It was the biggest increase in government-controlledfuel pricing since June 2009 and boosted averageretail prices for gasoline and diesel to record highs ofmore than 8 yuan per liter.Six weeks ago, the NDRC raised fuel prices by 300yuan per ton.

"Two price increases in two months is a significantraise," said Zeng Zhiling, director of LMC AutomotiveAsia Pacific Forecasting.

"It will certainly have negative impact on the carmarket, especially on the small, low-end vehiclesegment where buyers are more sensitive to pricechanges," he said.

But demand for high-end and luxury cars won't be asaffected, he added.

Zhang Yu, director of industry consultancy AutomotiveForesight (Shanghai) Co Ltd, agreed that the pricerise will hit consumer confidence, especially for thosewho buy small, economic vehicles made by domesticcarmakers.

"The market share for domestic brands might continue to slide this year," Zhang said.

Due to a late start in manufacturing and lack of advanced technologies, Chinese carmakersmainly produce small cars with low profit margins.

They sold about a third of the cars purchased in China last year, with foreign-branded vehiclesmade at Sino-foreign joint ventures comprising the majority of the market.

As sales stalled last year following explosive growth in 2009 and 2010, homegrown brands werethe most impacted and saw their market share squeezed further.

In the first two months of this year, sales of domestic-brand cars dropped 16.9 percent over ayear earlier as the overall market declined by 6 percent, according to China Association ofAutomobile Manufacturers.As a result, the market share for indigenous brands fell by more than 1 percentage point sincethe new year began.

Gu Xianghua, deputy...