Nissan Motor’s Chinese joint venture expects to boost sales almost 30% ahead of the original target to 500,000 cars this year.

Dongfeng Motor, the 50-50 joint venture, initially planned to sell 388,000 cars this year but the government’s tax reduction scheme had caused unexpected growth in demand for smaller cars, Chinese company president Kimiyasu Nakamura told Reuters at Nissan’s headquarters in Yokohama.

“We will meet that (original) target in October,” he said.

Nissan has outpaced the Chinese auto industry’s growth thanks to a model line heavy on cars with engines under 1.6 litres, which are subject to reduced taxes under the Beijing government’s stimulus scheme introduced earlier this year.

The government has not yet said if it will extend the scheme beyond the planned end on 31 December but Nakamura said he was confident the market would retain its general growth momentum with or without the stimulus, in contrast to the view in Europe.

“Motorisation is just starting in China, especially in the rural areas,” he said, noting that Nissan had at least half of its dealers in the fastest-growing region of the country – more than its Japanese rivals.

Nakamura said he expected the Chinese auto market to exceed 12m vehicles this year and top that record by another 8-10% in 2010.

Dongfeng Motor, which also sells commercial vehicles under its own brand, plans to be selling 1m vehicles a year by 2012 for annual revenue of CNY100bn (US$14.6bn) by then.

Nakamura said the 2012 sales goal now “might be” conservative, while stopping short of updating it.

Nissan’s local venture has plans to lift production capacity to 700,000 cars a year by 2012, excluding the planned introduction of a low-cost entry-level car that Nissan plans to launch globally next year. Nakamura declined to disclose to Reuters the location or initial production volumes for that model.

Earlier this month, Nissan lifted its own 2009 sales target for Nissan and Infiniti-brand cars in China by 18% to 670,000 vehicles, the report noted.