"Although the market gloom still needs some time to turn around, the bolstering effect to consumer confidence has been obviously felt," said Yang Yang, a manager at Beijing Zhonglian Auto Market. "The customer flow in our market has seen a rally since the announcement of the price cut."

Domestic auto sales had dropped during the last few months as buyers sat on sidelines worrying about expensive fuel or expecting further decreases in car prices, said Qin Xuwen, an auto analyst with Orient Securities Co. Ltd. "They are more motivated to take actions now," he said in an interview with the Securities Times.

But the biggest beneficiary will be sellers of subcompact cars, which have received some additional support from the fuel tax policy, Qin said.

While the price reduction is widely welcomed by a number of industries, its impact on the country's major oil refiners is more of a mixed one.

On the one hand, it will eat into the earnings of refiners that have finally grabbed a rare chance to make profits after enduring painful losses. But on the other hand, lower prices will lead to more oil consumption and help drive up economic growth, benefiting the refiners in the end.

Nevertheless, it is a significant step to ensure domestic demand during a period of global downturn, said Wu Jiandong.

"The current global crude plunge has offered an opportunity for China to lower the retail price and avoid re-incurring losses on its refiners at the same time," Wu said. "Given the huge gap between the international crude oil price and the domestic level, the refiners can still reap juicy returns."

As the government advances a more flexible pricing regime, the oil companies will be better shielded from refining losses, said China International Capital Corp. Ltd. in a report.

"They would become less exposed to international market fluctuations, with a more stable and predictable profitability," the report said.