Beijing's policies to support China's auto market drove sales up 34% in May, according to data issued Tuesday by a semi-official industry group, as the country remained a standout in the struggling global car industry.

Auto sales last month totaled 1.12 million units, the China Association of Automobile Manufacturers said. In contrast, U.S. car sales fell 34% in May to 925,824 units.

"Based on the current momentum, sales this year will easily reach 10 million units," said Global Insight analyst John Zeng. "For this year, there is no question about growth."

China's auto sales in 2008 rose 6.7% to 9.38 million units. Sales in the first five months of this year rose 14.3% from year earlier to 4.96 million units, according to the CAAM data, the first time China's car sales growth has hit double digits this year.

The latest data show Chinese consumers are still responding to government measures implemented early this year to boost small car sales, which included subsidies and a purchase tax cut. For example, sales of minibuses, a segment that benefits from the policies, rose 84% in May from a year earlier to 172,600 units.

Sales of other vehicle segments have also been growing. Passenger car sales rose 42.4% from a year earlier to 591,300 units, while sales of sport-utility vehicles rose 25.8% to 47,700 units, CAAM said.

Car sales in China are soaring even as sales in developed markets are falling. New-car registrations in Japan fell 19% in May to 178,503 units and new car registrations in Europe dropped 12% to 1.25 million units in April.

Zeng said the lasting impact of the measures has surprised some in the industry. Forecasts by analysts and industry officials early this year called for flat or low-single digit growth for 2009.

Auto sales growth has also outstripped growth in China's retail sales. Retail sales in April, the last month for which data are available, rose 14.8% while auto sales that month rose 25% to 1.15 million units.

China's auto market has likely peaked for the year, said Zeng, who added that there are already signs this month of a slowdown in sales. The summer months are traditionally slow, he said.

Zeng said the biggest beneficiaries of the government policies are General Motors Corp.'s (GM) commercial vehicle joint venture in China, SAIC-GM-Wuling Automobile Co., and Chongqing Changan Automobile Co. (000625.SZ).

Consumers who buy the Wuling Sunshine and Wuling Rong Guang minivans and Changan Star minibuses qualify for the government incentives because of the models' small engines.

-By Patricia Jiayi Ho, Dow Jones Newswires; (8610) 6588 5848; patricia.ho@dowjones.com