China's auto sales reached a record high of 28.03 million in 2016, up 13.7 percent year on year, boosted by favorable purchase tax policies on smaller cars.
The growth rate marks the highest since 2013, the China Association of Automobile Manufacturers said in an online statement.
Total output also hit an all-time high, jumping 14.5 percent from one year earlier to 28.12 million units.
Some 3.06 million vehicles were sold in December, up 9.5 percent year on year. The growth rate slowed from a 16.6-percent increase in November.
Chinese auto sales growth peaked at 45 percent in 2009 and has fallen steadily as cities try to control smog and congestion by limiting new vehicles on the roads.
Last year's boom was largely due to the favorable purchase tax policies, according to the statement.
In October 2015, the government slashed the purchase tax on small cars by half to 5 percent. The tax break was applicable to cars with engine displacement of 1.6 liters or less and was in effect between October 2015 and the end of 2016.
Last year, new energy vehicles remained popular among Chinese consumers, with sales surging 53 percent year on year to 507,000 vehicles.
Sales of pure electric vehicles surged 65.1 percent year on year to 409,000 units, accounting for 80 percent of new energy vehicle sales.
China, the world's largest auto market, exported 708,000 vehicles last year. The figure is expected to reach 750,000 this year, up 5 percent year on year.
However, China's auto imports will continue to drop in 2017, falling to around 1 million units.
The association also predicted that auto sales would expand by 5 percent to 29.4 million this year.