China's passenger car sales rose 21 percent in October, as a surging stock market boosted consumers' wealth in the world's second-largest vehicle market.

Drivers bought 496,900 cars last month, the China Association of Automobile Manufacturers said in an e-mailed statement on Friday. Total vehicle sales, including trucks and buses, rose 20 percent to 692,300.

Automakers led by China FAW Group Corp and SAIC Motor Corp, a partner of Volkswagen AG and General Motors Corp, have boosted sales in China because of economic growth. The benchmark CSI 300 Index has also more than doubled this year, fueling demand as many Chinese stock-market investors buy new cars with their profits.

"Car sales will keep on growing at this pace in the coming few years in line with people's increasing wealth," said Wang Liusheng, a China Merchants Securities Co analyst in Shenzhen.

Passenger car production rose 24 percent last month to 522,200. Overall vehicle output climbed 21 percent to 713,100.

In the first 10 months of 2007, car sales increased 24 percent to 7.15 million, with production expanding 23 percent to 7.22 million, according to the statement.

The two bestselling models in the period were the Volkswagen Jetta, made by FAW-Volkswagen Automotive Co, and the Volkswagen Santana, made by a venture with SAIC Motor.

Volkswagen, GM and other automakers are building more capacity and designing new cars in China to boost sales in the world's fastest growing major economy.

Volkswagen raised its full-year sales target 13 percent to 900,000 vehicles last month after sales climbed 30 percent to 684,786 in the first nine months.

The company, which said three years ago that it wouldn't build any more plants in China, plans to expand production in the country by 2010, Winfried Vahland, president of the company's China unit, said in an October 12 interview.

GM said last month it plans to set up a research laboratory in Shanghai to develop vehicles that run on alternative fuels. The center will study the possibility of developing alternative-fuel vehicles including plug-in hybrids, CEO Rick Wagoner said on October 29.

Bloomberg News

(China Daily 11/10/2007 page10)