GM plans to build five more plants in China next year, as part of its efforts to ramp up manufacturing capacity there by 65 percent by 2020, executives said on Sunday.

Rival Volkswagen's early entry into China focused on rapidly-developing eastern provinces - now it plans to push into the west.

's luxury division which will target smaller megacities in central and western provinces to raise the number of dealerships by about half to 500 in the next three years, chief executive Rupert Stadler told Rters.

"That's where new business is emerging, where things get rolling," Stadler said at the Beijing show. "We don't need more dealers in Beijing and Shanghai."

Western cities

China's auto market is set to expand 8-10 percent this year, slightly slowing from 2013 when it sold 21.98 million vehicles, up 13.9 percent from a year earlier.

Vehicle density in China's smaller cities offer lucrative growth prospects.

The average number of cars per 1,000 inhabitants in Ya'an, a city of about 2 million population in Sichuan province is 18, compared with 123 in first-tier coastal cities Shanghai and Guangzhou, according to VW's website.