China will overtake the United States as the world's biggest luxury car market as early as 2016, as rising incomes and desire for status boost premium auto brands, a consultancy said Monday.

Global management consulting firm McKinsey & Company said China is already the second biggest market for "premium" cars after the United States, with sales of 1.25 million vehicles last year.

China's premium car sales could reach 2.25 million in 2016 and 3.0 million by 2020, it added in a report.

McKinsey defined the "premium" segment in China as cars costing from 200,000 yuan to 1.2 million yuan ($32,000 to $190,000), excluding "ultra-luxury" cars commanding even higher prices.

The US market for premium cars was an estimated 1.7 million vehicles last year and was forecast to rise to 2.3 million in 2020, it said.

"China is a growing market. People's confidence in the future is very high," said Sha Sha, a partner at McKinsey and the main author of the report.

"Chinese people want to upgrade and have the aspiration to buy premium cars," she told AFP.

German automakers -- including Audi, BMW and Mercedes-Benz --- account for 80 percent of China's premium car market, McKinsey said, but added competition in the segment was increasing.

US auto giant General Motors launched a Cadillac brand luxury sedan, the XTS, in the country last week.

China is already the world's biggest auto market, with sales rising 4.3 percent year-on-year in 2012 to 19.31 million vehicles.

But slowing domestic economic growth, limits on car numbers by some cities and a political row between China and Japan that hurt sales of Japanese-brand cars weighed on the market last year.

McKinsey said income growth, confidence in the Chinese economy, willingness to pay for luxury cars and a desire to reflect social status were among the factors supporting the premium market.

Households purchasing a second car or upgrading from basic transport were a new factor in the market, it said.

"The fast rise of the newly affluent middle class and two-car families presents an intriguing opportunity for premium automakers," the report said.