China's auto sales rose 4.2 percent in August to 1.38 million units, an industry group said Friday, as the world's largest auto market continues to grow at a modest pace.

"The trend of small increases in sales is likely to be sustained," the China Association of Automobile Manufacturers said in a statement.

Sales of passenger vehicles -- which account for the bulk of overall auto sales -- reached 9.22 million units in the January-August period, up 6.1 percent from a year earlier, it added.

China, which overtook the US to become the world's top auto market in 2009, has become increasingly important for global players. Auto sales in the country rose more than 32 percent last year to a record 18.06 million units.

But the sector has since lost steam after Beijing early this year phased out sales incentives such as tax breaks for small-engine vehicles, originally introduced to ward off the impact of the global financial crisis.

Auto sales dipped 0.25 percent in April in their first decline in more than two years. Sales were down 3.98 percent on the year in May before they rebounded by rising 1.4 percent in June and 2.2 percent in July.

The association warned in June that auto sales growth for the whole of 2011 would be just five percent, down from an earlier forecast of 10 to 15 percent.

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