A loyal partner in China's automobile market for more than two decades, Volkswagen is setting new records despite the global downturn.

VW sets March record despite troubled times [China Daily]

"My estimate is that Volkswagen's sales in China will overtake Germany this year," said Martin Winterkorn, CEO of Volkswagen AG, "China is our second home market."

Volkswagen Group China and its joint ventures Shanghai Volkswagen and FAW-Volkswagen for the first time broke the 100,000-unit barrier in a single month as sales grew 9 percent in March to 112,466 vehicles - its best monthly sales ever in China.

The record came as new car purchases nationwide reached 1.11 million vehicles in March - another record - surpassing US sales for the third month in a row. Tax cuts and rebates for small car purchases are credited for the increase.

Total sales in the first quarter reached 284,143 cars on the mainland and in Hong Kong, 6 percent more than the 268,204 cars sold in the first three months of 2008.

Sales of Skoda cars jumped 18.7 percent to 19,248 units, enabling China to overtake Germany as the Czech brand's biggest market in the world - after arriving in the most populous nation just two years ago.

China halved purchase taxes on cars with engines smaller than 1.6 liters this year to boost the auto sector and has plans for 5 billion yuan in subsidies to vehicle buyers living in the rural countryside.

"Volkswagen Group fully supports the Chinese government's new policy to encourage production of vehicles under 1.6 liter engine displacement as well as other measures to boost automobile sales," said Winterkorn.

Volkswagen offers a range of models with engines smaller than 1.6 liters, including the new Lavida and Bora, as well as Skoda Fabia.

"Through the implementation of these measures, we believe that the Chinese automobile industry will not only develop steadily, it will do so at an even faster rate," said Winterkorn.