VW Prepares a Luxury Sedan for China

Volkswagen Group plans next year to debut a China-only VW-brand luxury sedan, sources tell Reuters. They say the car will be based on the popular Audi A6.

VW hopes the new model, code named 511, will boost margins for its self-named brand without poaching sales from the group's luxury Audi marque, according to the news service. The A6 sells for about 383,000 yuan ($62,400) in China.

The car was designed in Europe and will be produced in Shanghai by VW's joint venture with SAIC Motor Corp., Reuters sources say.

A VW source says the new VW model will cater to buyers who want a premium vehicle but hope to avoid drawing the attention of the central government's crusade against conspicuous wealth.

Price, style and content will be critical factors in establishing the new car's market position in China. If the price is too close to the A6, luxury-car buyers may simply opt for the Audi, an analyst tells Reuters. But if the price is too close to existing VW models, buyers may see little point in paying more for the car.