SHANGHAI (Bloomberg) -- Volkswagen outsold General Motors in China in the first half of the year, keeping it on track to extend its reign as the best-selling foreign car company in the world's biggest vehicle market.
VW's sales in China, including Hong Kong, rose 18 percent to more than 1.8 million vehicles, the company said. That compares with GM's 1.73 million units, an 11 percent increase.
In 2013, the German automaker outsold GM in China for the first time in nine years.
China is the biggest market for both VW and GM and key to the three-way race with Toyota Motor Corp. for the global sales crown.
To win more sales from the projected 1 billion drivers within a decade, VW CEO Martin Winterkorn this month announced the company will build two more plants in China, increasing its total investment to more than 20 billion euros ($27 billion).
"Volkswagen is gaining market share as their vehicles hit the market right at the bull's-eye," said Jochen Siebert, Shanghai-based managing director of researcher JSC Automotive Consulting. "GM is not able to match that."
VW is planning to increase the number of models it sells in China to more than 100 by 2018, from 63 last year, according to a company presentation posted on its Web site. It also plans to boost the number of dealerships to more than 3,600 from 2,395 outlets in 2013.
VW said in April it may sell more than 3.5 million vehicles in China this year and would probably exceed 10 million units in global deliveries four years earlier than previously planned.
VW said this month that it will build two new plants in China's Tianjin and Qingdao with its partner, China FAW Group, making compact cars.
"China has become our largest and most important market," Winterkorn said in the July 7 statement. "To satisfy the demands of our customers in the country, we are engaging in a further substantial expansion of our capacities in China."
35 million market
At stake is a market that GM has estimated may reach 35 million units a year by 2020. The Detroit-based automaker, which sells the Buick, Chevrolet and Cadillac nameplates in China, will also add production capacity to cater to rising demand, boosting the number of vehicles it can make a year by 65 percent by 2020, GM China President Matt Tsien said in April.
GM will have five new plants in China by the end of next year, invest $12 billion through 2017, and introduce more than 60 new and refreshed models by the end of 2018, he said.
The automaker is also betting on the latest installment of the alien-robot saga, "Transformers: Age of Extinction," to help jump-start Chevrolet sales in China, Tim Mahoney, global chief marketing officer for the brand, said in an interview last month. The film shows cars including the Camaro and Trax small SUV.
"Most of GM's models are at the end of the life cycle, so this year, they're a bit weak compared to Volkswagen on the product side," said Siebert at JSC Automotive.
The sales gap between VW and GM widens further if the Wuling brand is excluded from the U.S. automaker's China tally, as some analysts tracking the industry do.
Built by its joint venture with SAIC Motor and Wuling Automobile, the light commercial vehicle brand accounts for about half of GM's deliveries in the country.
China's passenger vehicle sales climbed 11 percent in the first six months of the year, according to the state-backed China Association of Automobile Manufacturers.
Industrywide vehicle deliveries, including commercial vehicles, are forecast to increase as much as 10 percent in 2014, slowing from last year's 14 percent growth as anti-pollution and austerity campaigns spread, according to the association.