SHANGHAI -- General Motors and one of Volkswagen AG's ventures posted sales rises in China on Friday, but analysts were skeptical of a return to rapid growth in the world's third-largest vehicle market.
GM said its four Chinese ventures sold 247,232 units in the first five months, up 12.4 percent from the same period of 2004, with just over a third of that coming from its flagship facility in China's commercial stronghold of Shanghai.
The Detroit giant did not give a monthly breakdown.
The smaller of Volkswagen's two Chinese auto-making joint ventures posted a 22 percent increase in vehicle sales in May from April, a sign that sharp discounts might be luring buyers back into showrooms.
FAW-Volkswagen, the German firm's 50-50 tie-up with First Automotive Works, moved 23,000 vehicles last month, compared with 18,900 in April, executives told Reuters without offering yearly comparisons. Volkswagen counts China as its largest market outside Germany.
"It doesn't seem that the market is warming up as soon as had been expected," said Capital International analyst Lin Wenjun. "Many consumers are still waiting in the wings for more price cuts."
Analysts and industry executives expect car sales in China to grow 10 to 15 percent this year -- well off a near-doubling in 2003, when growing numbers of newly rich Chinese got behind the wheel for the first time.
Executives at Volkswagen's other Chinese plant, based across town from GM's Shanghai facility, declined to comment on sales, which state media said hit 22,800 vehicles in May.
LOAN CURBS SLOW SALES GROWTH
The pace of growth in China's car market began slowing in the middle of 2004 after Beijing stepped up curbs on easy car loans and implemented measures to cool a racing economy.
Foreign automakers quickly turned to discounts to stimulate sales. In March, GM slashed prices of two Buick models in China by up to 15 percent to counter a move by Japan's Honda Motor Co.
The dominant carmaker in China, Volkswagen has steadily conceded market share to GM and other rivals. Some analysts expect its Chinese operations to lose money this year.
The top executive at Volkswagen's smaller venture -- located at the northeastern city of Changchun -- had said in April he expected a meagre 1 percent rise in unit sales in 2005 after they inched 0.7 percent higher to 300,118 units in 2004.
The German firm's share of the Chinese car market had slipped to about a quarter by the end of last year from a third previously, state media have said. Runner-up GM said it had a 10.4 percent share of all vehicle sales as of the end of March, while it asserted VW was only slightly ahead, with about 13 percent.
VW contends it still has a fifth of the car market, but it does not release figures for the broader vehicle market.
To defend its lead, Volkswagen is spending 5.3 billion euros ($7.1 billion) to lift capacity from 700,000 units now to 1.6 million by 2008.
Global automakers are investing $15 billion in China to triple annual production to 7 million cars by 2008, sparking fears of massive overcapacity and fierce price wars.
GM is also expanding. On Friday, the U.S. firm said production had begun at a new engine plant in northern China, with annual capacity for 375,000 units. And on Thursday it announced it would build a $387 million engine plant with its partners and would buy a small vehicle producer.