Volkswagen, largest German automaker, will release a luxury car made especially for the Chinese market, in hopes of earning more money, according to sources.
The bold move would make Volkswagen head-to-head with its subsidiary and luxury car maker Audi.
Audi partly owned by the Volkswagen Group of Companies, amassing 99.55 percent of Audi's shares.
The new car is reported to take on the Audi A6, China's top-selling luxury sedan.
China's Audi A6 is unique compared to Audi A6 anywhere else in the world as it has a longer body making it larger than its competitor brands.
Meanwhile, the cost of the Volkswagen luxury sedan is still unknown.
However, the German car giant is not expected to price it near the Audi A6's 383,000 yuan (approximately $62,375) as it would eat up the sales of its sister company.
Globally, Volkswagen sells three times more cars than Audi.However, the German brand, known for producing small cars and family-oriented cars, is only able to earn half the profit Audi makes.
"Volkswagen wants to boost its brand value, which is natural for any company seeking higher margins. But it's not easy," as quoted by Yale Zhang, managing director at consultancy Autmotive foresight.
"If Volkswagen's premium car is priced too high, people would go straight to Audi. If the price is not high, then what's the point?" Zhang added.
Volkswagen wants to be as successful as Audi in the luxury vehicles industry.
Currently, China is experiencing controversies regarding China's public officials are discouraged from owning luxury vehicles.
This creates a demand for car manufacturers to produce luxury cars without the attention associated from owning one.
The move by Volkswagen would entail it capturing a market dominated by Audi, BMW and Mercedes-Benz.
The Volkswagen Group of Companies include Audi, Bentley, Porsche and Lamborghini. The car manufacturing conglomerate is responsible for one-fifth of passenger vehicles sold in China.
Volkswagen produced 3 cars that earned a spot in the "Top 10 best-selling cars of all time" by web site 24/7 Wall St: The Volkswagen Golf, Volkswagen Beetle and the Volkswagen Passat.
