Besides introductions of new competitive products, Volkswagen should have to cut costs to deal with hot price wars in China's car market.
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.
The recent buying is really just the start.
These consumers don't really care about the prices.
It's risky for local companies to start at the high end. Their brands aren't strong enough.
When you loosen that up, and people can drive small cars everywhere, then people will buy.