Rao suggested that the government launch a fuel tax this year and gradually increase it over the next few years, to curb inflation and negative growth in the auto market in the short term.

Gary Smyth, executive director of General Motors' global R&D laboratories, also discussed his worries about China's energy and environmental challenges at the China Automotive Energy Forum on Tuesday.

"General Motors expects the number of vehicles on China's roads to surpass that in the United States and Europe by the end of this decade," he said. "We are committed to reinforce the development of advanced propulsion technologies and electrification solutions in China, to help reduce the petroleum consumption, lower tailpipe and carbon dioxide emissions from vehicles, and create a more sustainable energy model here."

He said that the government should gradually scrap outdated diesel-powered vehicles, which contributed 97 percent of the emissions among all kinds of vehicles.

Smyth added that GM is also working on personal mobility solutions for mega-cities to address urban congestion issues.

The company has signed a memorandum of understanding with Sino-Singaporean Tianjin Eco-City Investment and Development Co and the Tianjin Eco-City Administrative Committee to collaborate on a two-year pilot program that will study the feasibility of using electric networked-vehicles in the Tianjin Eco-City area.

Last week, the US automaker posted record sales in China in March and in the first quarter.

GM's sales increased 12.6 percent year-on-year to 290,538 units last month, the second-highest monthly sales total in the company's history in China. That helped its domestic sales in the first quarter grow to 816,373 units, up 9.6 percent from the same period last year.

Another US automaker, Ford Motor Co, also posted record-high sales in March and in the first quarter. Ford's sales of 81,387 units represented a 65 percent surge year-on-year.

The company attributed the growth to new product launches in the first quarter, including three new SUV models.

More reports on China's car sales

Japanese car sales to China set to recover

Luxury car sales in overdrive

Car sales stay on road to recovery

Car sales in smaller cities to drive growth