GUANGZHOU - Toyota Motor said it expects its China sales growth to slow next year, after strong gains in 2009 fueled by government incentives aimed at boosting the national auto sector during the global downturn.

Toyota's China sales should rise about 17 percent to 700,000 vehicles this year from 600,000 in 2008, Masahiro Kato, president of the company's China operations, said at the Guangzhou Autoshow on Monday.

He added that sales growth was expected to slow to about 14 percent next year, with the company aiming to sell about 800,000 vehicles in China.

China introduced a number of incentives this year to boost its auto market, aimed at stimulating consumer activity during the global economic slowdown. But many of those incentives, including reduced sales taxes on small cars and subsidies for buyers in rural areas, are set to end at the end of the year.

Those incentives turbo-charged China's auto market this year, with unit sales up 45 percent in the year through October and up 76 percent in October alone.

But after their turbo-charged year in 2009, the market, which this year passed the United States to become the world's largest, could return to more normal growth next year if incentives aren't renewed, industry watchers said.

While players such as GM and Volkswagen have seen large gains, Toyota and fellow Japanese carmaker Honda Motor lagged the market this year due to limited offerings of small cars eligible for low sales tax.

From January to September, Toyota sold about 486,000 cars in China, up 13 percent from a year earlier, compared with a 42 percent growth of the overall car market.

Its mid-sized Camry sedan ranked No. 9 among the country's top 10 brands in the first 10 months, down from the No. 4 spot two years ago, well behind Hyundai Motor's Elantra, GM's Buick Excelle, which both have smaller engines.

Industry analysts said Toyota has a chance to make a comeback again this year if it adjusts its product portfolio more swiftly in accordance with market needs.

Earlier this year, Toyota rolled out revamped versions of Vios and Yaris compact cars.

It also launched RAV4, a sport utility vehicle produced by its venture with FAW Group in April, followed by Highlander SUV, made at its tie-up with Guangzhou Automobile, the next month.

The company, which has manufactured and sold its hybrid Prius automobiles in China since 2005, said it also plans to sell plug-in hybrid cars in China on a trial basis in the not-too-distant future.

(Reporting by Fang Yan and Alison Leung, writing by Doug Young; Editing by Jacqueline Wong)

Toyota China