South Korea's Hyundai Motor Co and Kia Motors Corp are aiming to bump up sales in China by almost a quarter this year, heating up competition with global and local rivals.

Chung Mong-koo, chairman of the automotive group, on Thursday warned of rapid growth in China's local brands, which have stepped up their quality standards, and called for efforts to make Hyundai and Kia premium brands in China.

China, emerging as the world's largest market, is becoming the battleground to set the future of Hyundai and Kia, Chung said in a statement during his inspection of a plant of Kia Motors in Yancheng, Ziangsu.

We have to achieve the sales target of 1 million this year and build a strong presence in the Chinese market.

The target, which represents a 23 percent growth from last year, is the largest for a single country at the automotive group, the world's fifth-largest carmaker.

So far this year, Hyundai and Kia have sold a total 247,000 vehicles in China.

Hyundai, which produces Tucson SUVs and Verna compacts in China, is seeking to build a third plant with a 300,000-unit capacity to meet growing demand.

With the new plant completed, as well as a new Kia facility to be constructed in the second half, Hyundai and Kia will be able to churn out a total 1.33 million vehicles a year in China, the statement added, without elaborating.

Hyundai runs an auto joint venture with Beijing Automotive Industry Holdings Co in China and is among the major beneficiaries of Chinese government incentives for car purchases.

Other foreign automakers, including Ford Motor, General Motors GM.UL and Volkswagen, are also ramping up capacity in the world's third-biggest economy to catch up with robust demand.

Honda Motor Co, Japan's No. 2 automaker, forecast on Wednesday China sales would rise 11 percent this year.

Shares in Hyundai, which posted a record net profit in the first quarter, closed 3 percent higher after touching a record high of 136,500 won, with Kia adding 1.9 percent against a 0.3 percent slip in the wider market .

(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)