Audi, a subsidiary of Europe's biggest carmaker Volkswagen, said it had sold 313,036 vehicles in China last year, breaking for the first time the 300,000 mark.
"China is now Audi's biggest single market," the company said in a statement.
More than 80 percent of the cars were manufactured locally in China, the firm added.
"Particularly the premium segment in China is making very healthy progress - in our view it continues to offer very good growth potential," said Peter Schwarzenbauer, from Audi's sales department.
Audi is forecasting that it will sell 250,000 cars in Germany in 2012. Like its German competitors Mercedes-Benz and BMW, Audi is pinning its hopes on China for rapid growth, as it sees more traditional markets lose strength amid the eurozone debt crisis.
Audi announced last month it planned to build a vast new plant to provide up to 200,000 new cars a year for the booming Chinese market. The new factory in the southern Chinese city of Foshan will be up and running by 2013, said the firm.
Germany is the world's number two exporter after China.