Volkswagen is China's market leader

The company wants to more than double its annual sales in China by 2007.

The country's car market has exploded on the back of rising incomes and lower import tariffs stemming from its entry into the World Trade Organisation.

Overall car sales grew about 50% in 2002, passing the one million mark.

Price war

FAW-Volkswagen, a 50-50 joint between the German car giant and China's First Automotive Works, is China's top car maker, with more than 40% of the market.

It lost share in 2002, as the market was opened up to foreign rivals such as Shanghai General Motors.

But the liberalisation of China's car market sparked a price war, which boosted overall sales.

Volkswagen said it aims to sell more than 600,000 cars a year in China by 2007, compared with 200,000 cars in 2002.

"That is our target and we will develop more models to achieve it," said a spokeswoman.

Plant decision

The company plans to sell at least 267,000 cars in 2003, including 138,000 Jettas, 75,000 Boras and 49,000 Audi sedans.

FAW-Volkswagen sold nearly 43,000 cars in the first two months of this year.

A decision is expected later this year on where the new plant will be built.

The company, which is based in Changchun, capital of the northeastern province of Jilin, was the first large scale modern car manufacturer to set up in China.

It began trading in 1991, before launching into full scale production in 1996.

Volkswagen also has another Chinese venture with Shanghai Automotive Industry Corp Group, which manufactures the Santana and Polo models.