Audi reinvents itself in China's luxury market

BEIJING -- General Motors may be China's biggest foreign automaker, but Volkswagen AG dominates the Beijing auto show.

At the convention center, the German automaker filled an entire building with various models of its own brands. Each of Volkswagen's brands attracted a crowd, and the biggest draw appeared to be Lamborghini's controversial Urus concept SUV.

But the most significant introduction may turn out to be the Audi RS Q3 concept, a sporty little crossover that reveals Audi's plan to expand its range downmarket into the compact luxury segment.

Audi, China's biggest luxury brand, is building an assembly plant in Foshan which will produce the A3 compact car.

Assuming the plant runs at full capacity -- seemingly a safe bet, given Audi's rising sales -- the A3 will become Audi's volume leader in China.

Audi, once known as the ride of choice for Chinese bureaucrats, is quietly reinventing itself as a brand for young entrepreneurs.

BMW and Mercedes are making similar moves into China's entry-level luxury market. This should make for a very interesting battle.