Volkswagen and General Motors yesterday raised their forecasts for car sales in China, as the world's biggest vehicle market keeps beating expectations in spite of Beijing withdrawing some tax incentives.

First-quarter Chinese car sales rose 76 per cent from the year earlier period to 3.52m, according to figures released by the government-affiliated China Association of Automobile Manufacturers.

Kevin Wale, head of GM in China, said the unexpectedly strong growth – which came in spite of the Chinese government tax incentive for small vehicle purchases being halved – would allow the US carmaker to hit its target of 2m sales in China in 2010. That is four years ahead of schedule.

GM, the largest overseas carmaker in China, expects the Chinese market to continue pulling ahead of the US market this year.

Total Chinese auto sales this year are expected to hit 17m, a 25 per cent increase from 13.6m last year, according to the China Passenger Car Association.

GM expects a total market of closer to 15.5m or 16m vehicles. “But anything is possible,” Mr Wale said, noting that he has consistently underestimated the strength in the market. GM expects to sell 3m vehicles in China by 2015.

VW said yesterday that it would also revise its forecast upwards. Along with its two joint ventures, Shanghai Volkswagen and FAW-Volkswagen, the German carmaker said it delivered 457,259 cars in the first quarter of 2010 to customers in the Chinese Mainland and Hong Kong – up 60.9 per cent from the year earlier period.

“The Volkswagen Group's strong performance in the first quarter of 2010 has exceeded our expectations,” said Winfried Vahland, president and chief executive of VW China. “Sales in the first quarter allow us to be more optimistic.”

GM said growth was expected to moderate from now on, noting that first-quarter growth figures looked extremely strong partly because the first quarter of 2009 was very weak. GM's biggest worry is that tightened monetary conditions could choke off growth later in the year, according to Mr Wale.

Geely, China's largest private carmaker, which has announced a deal to buy Volvo from Ford, said yesterday that sales rose 68 per cent in the first quarter, slightly below the industry average.

For the full year, Geely said it was targeting a 22 per cent growth in sales to 400,000 units.

Geely Automobile Holdings, the Hong Kong-listed arm, said net profit in 2009 grew 35 per cent to Rmb1.2bn ($176m), on sales that tripled to Rmb14.1bn. While export sales volume declined 49 per cent, revenues increased 85 per cent in Geely's home market.

Gui Shengyue, chief executive of the Hong Kong operation, said Volvo should be able to break even in the fourth quarter of this year.