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VW, GM jousting for sales dominance in China

– Volkswagen will vie with General Motors for the sales crown among foreign automakers in China next year, gaining share as Japanese carmakers led by Toyota struggle to recover amid a territorial dispute.

VW, whose luxury Audi sedans are popular with Chinese bureaucrats, hasn’t held the lead in the country since 2004 and will probably sell 2.7 million vehicles in the country next year to GM’s 2.65 million, helped by eight new or revamped models including the Santana, Golf, Skoda Octavia and Audi Q3, according to industry researcher JSC Automotive Consulting. GM’s new offerings include the Cadillac XTS and three Opel models.

Passenger-vehicle sales in China will probably accelerate and gain as much as 10 percent next year, as a rebound in economic growth gathers strength, according to analysts surveyed by Bloomberg News.

Chinese leaders assuming power in a once-a-decade handover to be completed in March may introduce economic stimulus to increase domestic demand, Autoforesight Shanghai Co., LMC Automotive and Synergistics Ltd. forecast.

“When the economy stabilizes, Chinese consumers will have more confidence to buy cars,” said Lin Huaibin, a Shanghai-based analyst at IHS Automotive.

Foreign automakers are stepping up their investments in China, counting on the world’s largest pool of first-time carbuyers to help offset declining sales in Europe.

Total vehicle sales may surpass 19 million units this year, according to the China Association of Automobile Manufacturers.

Globally, Toyota is poised to take back the title of world’s biggest automaker for 2012, as VW fights GM for second place in the final week of the year. Toyota said its vehicle sales may rise 2 percent next year to reach a record 9.91 million vehicles, spurred by overseas demand.

In China, SUVs will remain the fastest-growing segment as it is “under-penetrated” and caters to the preference of Chinese consumers for roomier vehicles, while smaller cities will become more important for sales, said Steve Man, a Hong Kong-based analyst at Nomura Holdings.

The new leadership, helmed by Communist Party chief Xi Jinping, must decide the pace of market-driven change to boost consumer demand and balance the role of exports and investment.

China said it will seek a higher “quality and efficiency” of growth next year, and target “sustained and healthy development,” the state-run Xinhua News Agency reported.

The pace of sales may slow in China if more cities implement or tighten measures to control vehicle populations to curb pollution and traffic congestion.

GM could fend off VW with new models coming up next year, such as the Buick Lacrosse and Regal, according to IHS.

“We don’t get too hung up on trying to, in a single year, be too concerned about number one position,” Bob Socia, GM China president, said in a Dec. 18 interview in Shanghai. “But make no bones about it, we’re here to win.”