Volkswagen plans luxury sedan on Audi A6L platform for China

Volkswagen is reported to be working on a China-only luxury sedan based on the platform of the Audi A6L.

The vehicle, code named '511', would be manufactured in China by Volkswagen's second Chinese joint venture, Shanghai-Volkswagen.

The price of the VW premium sedan is yet to be  set, but nearing the A6's 383,000 yuan ($62,375) starting price could eat into Audi sales.

However, Volkswagen, known for  small cars and family-oriented models, is drawn by Audi's margins. Though Volkswagen car sales number three times more than Audi globally, yet Audi earns makes double the profit of VW-branded cars.

According to Yale Zhang, managing director at consultancy Automotive Foresight, Volkswagen wanted to boost its brand value, which was natural for any company seeking higher margins, but it was not easy.

He added if Volkswagen's premium car was priced too high, people would go straight to Audi and if the price was not high, then there was not much point.

Volkswagen aimed to replicate the success of Audi in luxury vehicles at a time when a state crackdown on extravagance among public officials was creating demand for upmarket cars absent of marques typically associated with opulence.

Therefore, premium models under the Volkswagen brand would be especially attractive to those who wanted a superior car but did not want to draw  attention to it.

Meanwhile, Reuters reported that Volkswagen was working on a VW-badged luxury sedan designed solely for China, citing two people with knowledge of the plan.

The Audi's A6 is China's top-selling luxury sedan. The A6 in China has a longer body than A6's elsewhere, which provides more leg room, out-sizing many of its rivals.

The move would see the German auto maker enter a segment dominated by players like Audi, BMW and Daimler's Mercedes-Benz, which, in turn sought growth by producing more affordable models closer to Volkswagen's line-up.

Moreover, luxury cars yield higher profits.  Volkswagen expects the segment to continue to grow rapidly.

According to a forecast by McKinsey, China's premium car market could surpass that of the US to become the world's biggest as early as 2016 thanks to increasing affluence.