Jan. 10 (Bloomberg) -- General Motors Corp., banking on emerging markets to counter falling U.S. sales, posted its slowest growth in China in at least five years as Volkswagen AG and Ford Motor Co. lured customers with newer models.

The automaker's China sales rose 19 percent in 2007 to 1.03 million vehicle, it said in an e-mailed statement today. Volkswagen's sales in the country grew 28 percent, Beijing-based spokesman Kai Grueber said in a telephone interview today.

GM's expansion in the world's second-largest auto market slowed as customers opted for Volkswagen's Skoda Octavia and the Ford Focus over the Buick Excelle. The automaker, battling with Toyota Motor Corp. to extend its reign as the world's largest carmaker, expects to sell 75 percent of its vehicles outside of the U.S. within a decade, Chief Executive Officer Rick Wagoner said earlier this month.

``GM's growth last year wasn't as outstanding as in previous years due to a lack of competitive new medium-sized models,'' said Matthew Kong, associate director of Fitch Ratings in Beijing. ``The company is not only facing challenges from its long-time rival Volkswagen, but also from Toyota and Ford, which are catching up quickly with appealing products.''

Volkswagen Sales

Volkswagen, the second-largest overseas automaker in China behind GM, sold 910,491 vehicles in the country largest year, Grueber said, adding that its market share rose to 18 percent from 17 percent. The automaker introduced at least six new models last year, including the Octavia and the Magotan.

Volkswagen, based in Wolfsburg, Germany, expects to boost China sales as much as 20 percent this year to at least 1 million vehicles, Grueber said. George Yang, GM's Shanghai-based spokesman declined to provide the company's 2008 China sales forecast in a phone interview.

``Volkswagen and Ford had very good timing in bringing attractive medium-sized sedans to China, as rising affluence is boosting sales of bigger sized cars,'' said Fitch's Kong. ``Brand loyalty is a new thing in China and whoever has the right product wins.''

Sales of Toyota and Lexus-brand vehicles in China surged 62 percent to 500,000 last year on the popularity of Camry and Corolla sedans, the Toyota City, Japan-based automaker said today. Ford boosted its vehicle sales in the country 30 percent last year to 216,324 on demand for Focus cars.

The country's overall vehicle market surged 23 percent in the first 11 months of the year as economic growth boosted demand.

World's Largest?

GM's China slowdown, which followed four years of growth of at least 27 percent, may hurt the company's chance of extending its 76-year reign as the world's largest automaker.

GM beat Toyota in the first three quarter of 2007, selling 7.06 million vehicles, about 10,000 more than its Japanese rival. Toyota's full-year vehicle sales, including its Hino Motors Ltd. and Daihatsu Motor Co. units, rose 6 percent to 9.37 million, it said today. GM has not yet released its full-year tally.

GM plans to introduce ``several'' additional models in China next year, Kevin Wale, its country president, said in the statement, without elaboration. The automaker added five new models last year, including the luxury Park Avenue sedan and the Epica compact.

Shanghai General Motors Co., half-owned by SAIC Motor Corp., China's largest automaker, boosted domestic sales 17 percent last year to 479,427, GM said. Overall sales, including exports, totaled more 500,000 vehicles.

GM's U.S. vehicle sales fell 6 percent last year. Its market share dropped to 23.7 percent, continuing a decline from the 1962 peak of 51 percent. European sales rose 8.9 percent to 2.18 million.

To contact the reporter on this story: Tian Ying in Beijing at ytian@bloomberg.net

Last Updated: January 10, 2008 02:47 EST