Shanghai - Zhongsheng Group Holdings Ltd, China's second-largest publicly traded automobile dealer, plans to increase the number of outlets to cater to rising demand for luxury vehicles.

The distributor of eight car brands, including Porsche and Volkswagen AG's Audi, will expand its network by 40 outlets, about half of which will be added through acquisitions, said Chairman Huang Yi on Wednesday. The company, based in Dalian, had 98 dealerships as of March.

Zhongsheng is expanding even as Chinese auto sales slowed this year from the 32 percent growth in 2010, after the government phased out incentives and imposed purchasing restrictions to curb traffic.

Car sales may rise 10 percent in the country in 2011, with demand for luxury cars outpacing the overall industry, Huang said.

"Luxury brands are still growing sizably," said Huang, who aims to buy about 20 dealerships selling mid-priced to high-end brands in northern and northeastern China. "The drop was mostly in commercial vehicles and the lower-end sedan sector."

China's economy will expand 9.6 percent in 2011 and 9.5 percent next year, the fastest rate among major emerging markets, according to International Monetary Fund projections. Private wealth has grown with the economy, with the number of Chinese millionaire households jumping 31 percent to 1.11 million in 2010, according to the Boston Consulting Group.

Audi sold 28 percent more vehicles in the country in the first six months of 2011 than a year earlier, while Bayerische Motoren Werke AG said deliveries jumped 61 percent. Zhongsheng will spend as much as 1.3 billion yuan ($201 million) building 20 new outlets this year, and plans to add two new European luxury brands to its portfolio by the end of 2011, Huang said.

The dealer, which also sells sedans from Daimler AG's Mercedes-Benz and Toyota Corp's Lexus luxury divisions, more than doubled its profit last year to 1.03 billion yuan.

Zhongsheng has risen 76 percent over the past year, compared with 14 percent for Hong Kong's benchmark Hang Seng Index.

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