The number of cars on China's roads is set to rise sevenfold to 140 million by 2020, the government has forecast.
Foreign car makers are expanding in China
The total number of cars will eventually peak at 250 million, or 150 cars for every 1,000 people, the Communication Ministry said.
That compares with about 500 cars per 1,000 people in Western Europe, and close to 900 in the US.
The projected surge in car sales reflects rapidly rising income levels fuelled by China's economic boom.
According to government statistics, four million cars were produced in China last year, with the number of privately-owned vehicles rising by 80%.
China's burgeoning demand for cars has encouraged giant Western car makers to invest large sums on local manufacturing facilities.
Foreign car firms have pledged to spend a total of $13bn (£7.26bn) in China by the end of the decade, an investment which will triple the country's total car manufacturing capacity.
The latest forecasts come despite a summer slowdown in Chinese car sales, blamed partly on tighter credit conditions as the government seeks to rein in unsustainably high rates of economic expansion.
On Thursday, Volkswagen, China's top foreign car firm, said its Chinese sales had dropped by 19% in August compared with the previous month.