China premium car sales will probably surpass the U.

S. as early as 2016 and equal that of Western Europe by 2020, driven by rising incomes in the world’s second-largest economy, according to McKinsey & Co.

Demand for luxury vehicles in China is expected to more than double by 2020 to 3 million from the 1.25 million cars sold last year, outpacing the total market, McKinsey said in a report released today. Deliveries of upscale autos will probably reach 2.25 million by 2016, according to McKinsey’s estimates.

Automakers from General Motors Co. (GM) to Nissan Motor Co. (7201) are expanding their premium brands to compete for luxury buyers in China, where German marques led by Volkswagen AG’s Audi account for about 80 percent of sales, according to McKinsey. Ford Motor Co. plans to start sales of its Lincoln nameplate in China next year, while PSA Peugeot Citroen is readying its flagship DS dealership in Shanghai.

“Even now, China’s premium car market presents a sizable opportunity for latecomers,” Sha Sha, Theodore Huang and Erwin Gabardi at McKinsey wrote in the report. “Japanese and U.S. attackers still have a chance to create a market footprint.”

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