Oil prices remain a concern, with prices climbing above $98 a barrel on Feb 9 after Iran again threatened to cut off supplies to Europe.

On Feb 8, China raised retail prices of gasoline and diesel by 3 to 4 percent, the first hike in 10 months and a move that lifts prices to a record high.

Fuel prices are expected to continue rising this year, which could have a negative impact on the market. We will follow this trend and reflect it in our forecasts.

We still hold a cautiously optimistic view on the market and are maintaining our forecast from last month.

We predict the passenger vehicle market will register 10.9 percent annual growth to 14.5 million units, and the light commercial vehicle market will be on the track to recovery, growing 5.2 percent to 5.2 million units, a similar level to 2010.

This brings our full 2012 light vehicle forecast for China to 19.7 million units.

The author is a senior analyst at J.D. Power and Associates and LMC Automotive, who can be reached at JGu@lmc-auto.com