It's risky for local companies to start at the high end. Their brands aren't strong enough.

These consumers don't really care about the prices.

Besides introductions of new competitive products, Volkswagen should have to cut costs to deal with hot price wars in China's car market.

When you loosen that up, and people can drive small cars everywhere, then people will buy.

The recent buying is really just the start.

Volkswagen's China sales are expected to recover slightly starting from the second half of this year or 2007 with introductions of these new products.

Peugeot, which used to be lukewarm in China, is gearing up now. Peugeot may record faster sales growth as its unique exterior designs are becoming more acceptable to Chinese consumers along with rising car penetration rate.