The country sold 3.61 million passenger cars between January and June, up 17.07 percent from the same period last year, the Xinhua news agency reported, citing the China Association of Automobile Manufacturers.

The growth rate went down by 5.19 percentage points from the level recorded in the first half of 2007, it said.

China's government maintains controls on fuel prices, keeping them artificially cheap, but it lifted them by nearly 10 percent in November last year in response to the rising costs of global oil.

Petrol and diesel prices were again raised -- by up to 18 percent -- last month.

A plan by the government to ban more than one million cars from Beijing for two months starting July 20, in an effort to curb pollution and ease traffic gridlock before and during the Olympics, also had an impact on sentiment, according to Xinhua.

Experts said most potential auto buyers had taken a wait-and-see attitude and that the market would warm again in late September upon easing of the traffic restrictions, according to Xinhua.

FAW Volkswagen and Shanghai Volkswagen, both China joint ventures of the German auto giant, were the top two sellers in the first six months, followed by Shanghai GM, a partnership of US maker General Motors, it said.

Sales of sedan cars totalled 2.67 million, up 16.72 percent, while that of multiple purpose vehicles reached 111,400 units, rising 4.09 percent. In addition, 224,300 sports utility vehicles were sold, up 42 percent.

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