Renault SA  (RNSDF) led the auto sector higher Monday after it reported a sales surge in the world's largest car market, China, for the month of June and a solid set of international sales numbers overall.

The French automaker saw sales in China rise 138.9% last month, to 5,317, while total international sales expanded at a rate of 8.8% to 162,206. At the group level Renault saw worldwide sales growth of 4.1% with total sales coming in at 377,842 units.

Renault stock rose more than 2% to change hands at an intraday high of €85.20 in response to the announcement, far outpacing the nearly 0.30% gain of the Stoxx Europe 600 TMI Automobiles & Parts index.

The group wide data comes just days after the European Automobile Manufacturers Association (ACEA) said sales growth slowed in Europe during June, to 2.1%, albeit at levels close to those last seen in 2007 before the financial crisis.

Renault operates in China through its minority owned joint ventures with Brilliance China Automotive (BCAUY) and Dongfeng (DNFGY) .  

China's car market as a whole returned to growth during June, with sales rising 2.3% when compared with the same period one year ago, following two months of contraction. The China Association of Automobile Manufacturers said that sales hit 1.83 million units during the month.

Other firms to have benefitted from the return to growth were Honda, Nissan and Toyota, who saw sales rise by 18.7%, 6.7% and 5.4% respectively. U.S. firms General Motors (GM) - Get Report and Ford (F) - Get Report both saw sales slip in June.

In addition to being the world's largest market by unit sales, government plans to introduce minimum quotas for the sale of electric vehicles mean that China is an even bigger opportunity for Western automakers.

China wants 8% of all new car sales to be comprised of electric vehicles by the end of 2018 and for this number to rise to around 20% by 2025.

Volkswagen AG  (VLKAY) already has designs on the Chinese market and plans to launch its first all-electric vehicle for mass production by 2020. It has also pledged to shift more than 1 million of the vehicles by 2025.

However, it is up against stiff competition, with Elon Musk's Tesla Motors  (TSLA) - Get Report long ago committing to shifting 1 million electric vehicles by 2020.

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