Besides the Passat Lingyu and the Polo, the venture is making the Santana, Gol and Touran.

The venture plans to produce a Skoda Octavia compact sedan at the beginning of next year. It will also introduce Skoda's Superb, a mid-sized sedan, and the Fabia subcompact.

'Wise move'

Yale Zhang, director of emerging-market vehicle forecasts for auto consultancy CSM Asia in Shanghai, describes Shanghai Volkswagen's local development as a "wise move" amid acute market competition in China.

"China's car market is expanding rapidly. Most customers are first-time buyers who have so many different demands," Zhang says.

"Therefore, it is increasingly important for car-makers to speed up local development according to local customer needs."

Other foreign car-makers, including General Motors, Ford, Nissan, Hyundai and Kia, have set up or plan to establish technical centres at their Chinese car ventures.

Future development of Shanghai Volkswagen's technical centre, according to its engineers, will be completely market-oriented. Its products will contain "both Volkswagen origins and elements Chinese customers favour."

The company says the number of engineers at its technical centre will rise from the current 800 to 1,300 in 2008 and 1,500 in 2010. The vast majority of engineers at the centre are Chinese.

As for the "boy-god," Shanghai Volkswagen says it intends to put the Neeza concept car into commercial production, though it is not ready to discuss specifics.

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