China's Chery outsells GM auto venture in March

SHANGHAI, Apr 6 (Reuters) China's Chery Automobile Co., whose inexpensive cars have proved popular in the domestic market, outsold the local car venture of General Motors Corp.

in March, becoming the first home-grown player to surpass the Detroit giant's local unit in monthly sales.

Chery, a medium-sized but fast-growing player in east China, sold 38,000 cars last month, trailing only FAW Volkswagen, the top European auto maker's venture with FAW Group, which sold 39,800 cars, industry association data showed on Friday.

Volkswagen AG's tie-up with SAIC Motor Corp. claimed the number-three spot with sales of 37,700 cars, according to the China Association of Automobile Manufacturers.

Chery's robust monthly sales reflected the growing strength of China's car makers, although they remain overshadowed by multi-national players that increasingly look to China, the world's second-largest auto market, for growth opportunities.

Most domestic auto makers still rely heavily on deep discounts to attract buyers, with Chery's QQ compact selling at one-third the price of some GM Chevrolet models.

In late 2006, Chery struck a preliminary deal with DaimlerChrysler AG's Chrysler Group to build Chrysler-branded vehicles in China for export to Europe and elsewhere, which could potentially improve its global competitiveness.

Chery currently exports vehicles mostly to developing countries.

It aims to sell 393,000 vehicles in 2007, up 29 percent from 2006, including 70,000 units targeted for overseas markets.

REUTERS DKS RN1849