The Shanghai-Volkswagen Golfs and Polos will take VW into the sub-£7600 price category on the Chinese market for the first time.
The VW move is its response to increasing competition in the Chinese market. The German carmaker had a 54.4 per cent share of that market two years ago, but it has now slumped to 40 per cent. The lower-cost segment of the market is the main growth area in China, with Shanghai's Chery and Geely's Merrie models, as well as the GM Sail model performing well.
The production/sales target is for production of around 100,000 of the two new VW models in 2003.
VW's sales in China could reach a record 500,000 units for 2002 – up from last year's 359,000. The company says it plans to double sales to 1m units a year by 2007.