SHANGHAI – Volkswagen AG will launch a VW-badged luxury sedan designed solely for China next year in its pursuit of higher margins, reported Reuters, citing two people with knowledge of the plan.
The car will be based on Audi AG’s A6 and be codenamed 511, according to the people. It is designed in Europe but will be the brand’s first large “C-class” sedan to be manufactured in China by Shanghai-Volkswagen, a joint venture with China’s SAIC Motor. A spokeswoman at Volkswagen in China confirmed the existence of a plan for a C-class car but declined to provide details.
The price of the VW premium sedan is undetermined, and nearing the A6’s ¥383,000 ($62,375) starting price would risk cannibalizing Audi sales.
Volkswagen’s entry into China’s high-end car market will begin toward the end of 2015. It has not determined a price for its luxury car but has set an annual sales target of 50,000 vehicles, one of the people said.
Volkswagen sells three times more cars than Audi globally, yet Audi earns more than double the profit of VW-branded cars.
Going upmarket would see the German automaker trespass into a segment dominated by Audi, BMW and Daimler AG’s Mercedes-Benz, which are in turn seeking growth by producing more affordable models closer to Volkswagen’s line-up.
China’s premium car market could surpass that of the United States to become the world’s biggest as early as 2016 thanks to increasing affluence, forecast consultancy McKinsey & Co.