China became as important a market as Europe for Volkswagen AG's passenger car brand in 2011, as Chinese sales rose 14% to a record 1.72 million vehicles, the German auto maker said Friday.
Volkswagen, Europe's biggest auto maker by sales, said it is also gearing up to increase production in China and India.
But the group warned that market conditions are likely to prove more difficult this year although new VW models should help sustain sales growth.
"New vehicles such as the Passat, Jetta and Beetle, as well as the up! have made an excellent start in difficult market conditions," VW group Board Member Christian Klingler said in a statement.
Record demand in China and strong sales growth in the U.S. and Russia contributed to a 13% rise in overall VW brand sales in 2011 to 5.1 million cars.
In China, 2011 brand sales were up 14% at 1.72 million units, while in the U.S. sales surged 26% to 324,400 units. In Russia, 2011 sales doubled to 118,000 units.
In Europe, 2011 passenger car sales were up 11% at over 1.72 million units as VW benefited from robust demand in northern Europe, offsetting the impact of shrinking car markets in southern European countries worse hit by Europe's sovereign debt crisis.
Volkswagen is yet to disclose full-year car sales for the whole group which includes its luxury brand Audi. Audi is due to announce its figures next week.
Audi's sales have been growing strongly, putting it on course to overtake Daimler AG's Mercedes-Benz unit as the world's second-biggest luxury car manufacturer after BMW AG.
Volkswagen has said China overtook Germany as Audi's most important market in 2011. Audi's China sales rose 37% to 313,036 cars.
The group also said Friday it plans to build a new plant in Ningbo, southern China to keep up with growth in the country as part of the group's €14-billion ($17.8 billion) global investment program.
"China has become one of the largest and one of the most important markets for Volkswagen," Volkswagen China chief Karl-Thomas Neumann said in a statement.
"With our unprecedented investment program, we intend to increase our capacities in China to three million vehicles per year by 2013/14," Mr. Neumann said.
The German auto maker, also a major producer of trucks through its MAN SE and Scania AB units, is planning to increase car output in India too.
Volkswagen aims to take an 8% to 10% share of India's car market by 2018, Ulrich Hackenberg, Volkswagen executive board member and head of technology, said Friday. Mr. Hackenberg said the group thinks India's market will reach annual sales of five million units by then.
Volkswagen sold 78,408 cars in India in 2011, more than double the 32,627 sold in 2010, he said.
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