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General Motors Corp. (GM) expects its sales volume growth in China to exceed 20% this year, sharply higher from 2008, GM China President Kevin Wale said Wednesday.

“We’ve grown 38% in the first half of the year, so we would be expecting to do in excess of 20% (this year,)” Wale told Dow Jones Newswires in an interview. “Anything less than that we would be going backwards.”

The upbeat forecast comes as the auto maker is set to emerge from bankruptcy in the U.S., underlining the importance of the Chinese auto market to the U.S. car maker.

Last week, GM reported its sales in China surged 38% in the first half to a record 814,442 units. In 2008, its sales in China grew 6.1% to 1.1 million units.

China introduced favorable tax policies and subsidies earlier this year to boost auto sales after demand began declining in the second half of 2008.

That has helped to boost auto sales, especially of small cars, and spurred GM to revise its 2009 sales projection higher to 10.4 million to 10.5 million units. Last year, GM forecast its 2009 sales in China would total 9.7 million vehicles.

However, the sales trend in China for the rest of the year isn’t necessarily clear.

“It’s a tough call. There’s no sign at the moment that there’s any slowing down in the market,” Wale said.

“Obviously everyone’s a little nervous that, when you have stimulus packages, do you have a pull forward effect and at what stage does that run out? But my personal view is that I think the market is going to stay strong through the balance of the year,” he said.

Wale, who was in the southern city of Guangzhou to mark the launch of the new Buick LaCrosse sedan, said he expects GM’s share of the China auto market this year to increase from the 12% in 2008. Currently, the U.S. auto maker’s market share in China is 13%-13.5%, he said.

About 25,000 units of the current LaCrosse sedan were sold in China in the first half of this year.

“We expect we’ll do significantly more than that for the new product,” Wale said.

The China Association of Automobile Manufacturers is scheduled to release June and first-half sales figures in the coming days. GM estimates that overall sales in China’s auto market rose 20% from a year earlier in the six months ended June 30.

He said GM hopes to move forward this year on a plan to set up a light truck joint venture with China FAW Group Corp., one of China’s largest automakers.

GM also hopes to play a greater role in China’s fast-growing luxury segment, Wale said. He indicated GM’s models planned for this segment of the market may be modified, because Chinese tax rules tend to discourage purchases of vehicles with large engines, in part to promote energy conservation.

“With the change in tax arrangement it’s clear that we’re restricted a little bit because we have a preponderance of larger displacement engines and we need to work on that,” he said. “We will continue to plan our future portfolio and make it more consistent, more inline with the regulations in China.”

GM sold 3,363 units of its luxury Cadillac-branded vehicles in the first half, up slightly from 3,227 units a year earlier. It imports Cadillacs into China.

-By Patricia Jiayi Ho, Dow Jones Newswires; (8610) 6588 5848; patricia.ho@dowjones.com

Source WSJ