German luxury car makers have reported further sales increases in March, helped by strong demand in China and an accelerating recovery in the US while Europe continued to shrink.

Daimler, BMW and Volkswagen’s Audi all reported sales increases in key foreign markets as they pushed hard into China, where disposable incomes continue to rise, and increased production in the USwhere sales of cars and light trucks rose nearly 13% in March, Dow Jones reported.

Daimler reiterated its earnings targets for 2012 as it reported a 12% increase in Mercedes car sales during the first quarter and said it still expects vehicle sales to rise significantly this year. The company is also the world’s biggest maker of trucks and reported a 20% rise in truck sales in the first quarter.

Audi said it plans to increase sales by a double-digit percentage in coming months in China following a 37% rise in March. In the first quarter, its China sales were up 40% to 90,063 vehicles and it expects the introduction of its A6L model, to be presented at the Beijing auto show starting 23 April, to further drive sales.

BMW’s March US sales were up 13% to 26,382 vehicles, Mercedes’ sales rose 13% to 25,508 and Audi’s rose 18% to a record 11,585 vehicles.

BMW said it had achieved its best first quarter in the US since 2007, which showed “that customers feel more confident about the future.”

“The year is still young and BMW alone will introduce in 2012 more new and refreshed models in the US than it ever has before in any one year making us strongly optimistic about the months ahead,” said Ludwig Willisch, president and chief executive of BMW of North America.

In contrast, dats this week showed the market in France, Europe’s biggest market after Germany, contracted 24% in March while Italy shrank 27%. Registrations of new cars made by PSA Peugeot Citroen, Renault and Fiat fell by 30% or more in their home markets. Fiat described its sales performance as the worst for March in 32 years.

Daimler said it expects the market outside Europe to continue booming over the next eight years with the global market growing by 40m vehicles a year until 2020 and India emerging as the world’s third-largest auto market by the same year, behind China and the US.

Despite the predicted sales increase, Daimler said earnings before interest and tax from ongoing business are only expected to come in at last year’s EUR9bn because of heavy investments in new technology, extra production capacity and expansion of its product range.

The group has been overtaken by BMW as the world’s biggest luxury car maker in recent years and was also overhauled by Audi in 2011. It has targeted 2020 as the year it wants to regain top spot.

Daimler has teamed up with Renault to share the cost of developing new small cars and more efficient engines to meet increasingly stringent emissions targets in many countries.