The mainland's most successful vehicle firm, Shanghai Volkswagen, will start making a new passenger sedan car in the first quarter of 2000. Shanghai VW deputy managing director Peter Loew confirmed that the car - which the firm refers to as the Santana 3 - was a mainland model of VW's Passat sedan. 'We will need to fulfil the task of 40 per cent localisation to begin production,' Mr Loew said. 'That is a tough target.' The company would need to invest in new production facilities and to upgrade technology. Mr Loew said as production of new vehicles was phased in, the original Santana would be phased out. The process would end in 2002 or 2003. Shanghai VW is the mainland's most profitable vehicle firm. In 1997, it made 230,000 vehicles, claiming an estimated 50 per cent share of the mainland passenger car market. Mr Loew said the company this year would continue holding its market share, producing 250,000 cars. The Santana 3 will be a mid-sized sedan but is expected to compete directly with the luxury Buick General Motors will be making this year. The Santana 3 should be more expensive than the new Santana GSI 2000, which made its debut for a list price of 183,000 yuan (about HK$170,190), Mr Loew said. VW officials also said the vehicle maker's Changchun-based joint venture with First Auto Works was expected to begin producing a new car. Erich Schmitt, VW Group China operations vice-president, said the company would introduce a car similar to the Audi A6 in the coming months. Capacity at the Changchun plant was unlikely to change, however. Mr Schmitt said the facility had no plans to increase capacity beyond 30,000 vehicles a year. In 1997, the joint-venture sold 6,000 mainland-produced Audi cars.