SHANGHAI -- Car sales in China jumped by nearly half in June, the fastest growth this year, and Toyota joined other carmakers in raising 2005 sales targets to reflect a resurgence in the world's third-largest vehicle market.
Passenger car sales in the first half climbed a more moderate 10.6 percent to 1.843 million units, the China Association of Automobile Manufacturers said in a statement sent to Reuters, in line with expectations for 2005 growth of 10-15 percent.
Volkswagen, Europe's biggest carmaker, said it and its Chinese joint venture partners Shanghai Volkswagen and FAW-Volkswagen maintained their market lead with an 18 percent share of overall sales in the first six months.
"The car manufacturer was able to affirm its leadership with 265,000 sold vehicles including imports from January to June 2005," it said in a statement.
The numbers reflect retail sales rather than the wholesale data VW reported until the end of 2004, it said. In the first half of 2004, VW generated wholesale sales of some 306,000 units and had a market share of around 25 percent, a spokesman said.
Toyota Motor Corp., the world's second-largest auto maker, lifted its 2005 sales target for locally made vehicles by 8.6 percent to 145,500 units, and was preparing to more than double capacity by 2006, a Toyota executive and an official with an associated firm told Reuters.
Japan's largest car firm joins General Motors, Hyundai Motors and PSA Peugeot Citroen in boosting annual sales targets in China, after demand strengthened late in the second quarter.
"They have every reason to hike the targets, as shipments moved faster than expected in the first half," a senior executive with a major car dealership in Beijing told Reuters.
Car makers are betting on a partial return to the roaring growth of 2003, when car sales nearly doubled. The industry association said June passenger car sales in China leapt to 375,500 units, boding well for the rest of the year.
"In June, growth in China's passenger market showed signs of recovering," the association said in a brief statement.
Toyota's venture with FAW Group -- China's top local vehicle maker -- aimed to move 145,500 cars and sport utility vehicles this year, up from an earlier 134,000, according to an executive at a company that manages their sales.
The venture sold 52,000 units in January-May, up 58 percent from a year earlier, a Beijing-based Toyota executive told Reuters separately.
Analysts warn also that a resurgence in car sales after a dramatic slowdown in growth in 2004 might not translate into profits as car makers have slashed prices to entice buyers while Beijing clamps down on easy auto loans.
NO MORE EASY PROFITS
China, once an easy profit center, has become one of the industry's most intense battlegrounds, prompting firms to slash prices and launch models to appeal to a growing class of nouveau riche developing a taste for cars.
Global auto makers are spending some $15 billion to triple annual capacity to more than 7 million cars by 2008, which has sparked fears of an impending glut.
China is becoming a pivotal market for auto makers across the globe. GM and Volkswagen both count it as their second-largest market.
To help spur demand, Toyota -- which now sells the Vios, Corolla and Crown sedans among brands in the country -- plans to launch the Reiz and the Prius hybrid car this year, to lure clients from Nissan Motor Co. and other rivals.
Hybrids run off a rechargeable battery and gasoline, and are considered more environmentally friendly.
"We will continue to offer new models in China ... so long as there's a need for them," a Beijing-based Toyota executive said. "We're optimistic about the second half."
Toyota is on track to raise capacity in China to 335,000 units by mid-2006 from around 135,000 units now as a new plant in the south of the country starts full operation.
Analysts have said car sales are expected to grow 10-15 percent this year, matching growth in 2004 but well off a doubling in 2003. But signs that growth in demand could be on the rebound have surfaced.
PSA Peugeot last month raised its 2005 China unit sales target by 17 percent, followed by Hyundai hiking its by 15 percent after doubling capacity at its local plant.
GM told Reuters last week it was aiming for sales growth in excess of 20 percent, versus a previous target of keeping pace with the market.