China’s passenger car sales rose 48 per cent in June from the same month last year, consolidating a remarkable recovery that has catapulted China to top position in the world vehicle market so far this year, according to semi-official data released on Thursday.

The strength of China’s vehicle sales – total vehicles sales rose 18 per cent for the first half year to 6.1m from the same period last year – has surprised auto market analysts, government officials and even the country’s automakers, many of whom are scrambling to produce enough vehicles to meet demand. Some auto dealerships have reported shortages of vehicles and western automakers, such as Volkswagen and General Motors, have had to sharply increase production at their Chinese joint ventures to meet local demand.

Like other sectors of the Chinese economy, car industry growth this year was jump-started by the government, which in January announced tax breaks on small cars and subsidies for vehicle purchases in rural areas.

But car segments that were not targeted by tax breaks or subsidies also saw strong growth in sales, auto industry analysts said on Thursday.

High levels of bank lending are also believed to have helped spur demand. China on Wednesday announced that new lending in the first half was Rmb7,400bn ($1,084bn), up 201 per cent year-on-year and equal to 150 per cent of full-year lending in 2008.

Lending for car purchases had not risen – most Chinese buyers buy vehicles with cash – but higher levels of liquidity in general fed through to more corporate purchases of vehicles, analysts said.

General consumer confidence was also a strong factor in sales growth, said Mike Dunne, of the auto consultancy JD Power in Shanghai.

“The government is putting out a strong message that the financial crisis is concentrated in the US, but we in China are doing just fine. The world might be hurting, but not us,” he said.

He added that the impact of that message on car buyers “should not be underestimated”.

JD Power recently revised its 2009 forecast for Chinese passenger car sales to 7m, from 5.8m at the beginning of the year, and said that a further upward revision is possible.

Total vehicle sales rose 36 per cent in June year-on-year, the official Xinhua news agency said on Thursday, quoting figures from the China Association of Automobile Manufacturers.

It was the fourth month in a row that sales had exceeded 1.1m units.

The strength of the Chinese market is providing a rare ray of hope for western automakers already operating in China, and attracting companies like Fiat, long a laggard in China, to the market.

Earlier this week, Fiat signed a joint venture agreement with Guangzhou Automobile Group to make cars and engines in China from 2011. Fiat and GAC said the venture would have the capacity to produce 140,000 cars and 220,000 engines per year initially, but could later be expanded to produce as much as 250,000 cars and 300,000 engines annually.