It wasn't just Audi AG's latest luxury limousine that went on show on Saturday night.

Fireworks and fashion models shared the limelight as the German carmaker flaunted its "premium" image in Shanghai at the launch of its Audi A8 LWB (longer-wheel base) limousine.

Audi has recently boosted its efforts to build its brand, despite its title as China's No 1 luxury car marker after being among the first to produce vehicles locally. But its arch-rivals, BMW and Mercedes-Benz of DaimlerChrysler, have now launched their own offensives.

Audi A8's launch came 10 days after BMW unveiled the 325i, its first Chinese-made sedan, also in Shanghai, the nation's financial centre.

Signs are emerging of a battle between the world's luxury car makers in the fast-growing market of China.

Mercedes-Benz will start to produce its C and E-Class sedans in Beijing in 2005 as part of DaimlerChrysler's recent deal with Beijing Automotive Industry Holding Corp.

"It is not threat. It will help stimulate the growth of the whole luxury car market (in China) as all of us are trumpeting 'luxury' ... It will benefit Audi," said Andreas Deges, executive director of Audi's China operation, when asked to comment on the competition he faces from BMW and Mercedes-Benz.

Audi, a unit of Volkswagen, kicked off production in China in the early 1990s. And it has sold more than 200,000 vehicles in China, its second biggest market in the world after Germany.

It is now assembling the Audi A4 and A6 at Volkswagen's joint venture in Changchun, capital of Northeast China's Jilin Province.

"There is a lot of potential in China's luxury market. We have pioneered in the market and we will continue to pioneer as we have had a strong partnership for many years in China to help us understand the market quickly. We also have a strong customer base in China," Deges said.

"There will be many new Audi products introduced in China over the next few years," he added.

The new 3.0-litre Audi A8 LWB retails at 1.18 million yuan (US$142,000) in China, including import tariffs.

Audi has sold nearly 500 A8 sedans in China since it launched the model in July this year, according to Deges.

The company expects its sales in China, across all models, will reach 60,000 units this year, up from 36,500 units last year, he said.

(China Daily October 27, 2003)