As the first foreign carmaker to enter China in 1985, the Chinese joint venture with Volkswagen used to occupy 90 percent of the Chinese auto market in the beginning, and for a long period of time, the model Santana used to rule the country's roads.

This situation changed as multinational auto giants followed suit and China's homegrown cars began to boom. Volkswagen has been losing its market share, falling to below 20 percent in 2004. Its production has also decreased for two consecutive years since 2004.

Last year, the German carmaker beat back the competition, selling a record 710,505 cars on the Chinese mainland, consolidating its leading position in the market.

Volkswagen currently has two production bases in China - one in Shanghai, and other in the northeastern city of Changchun, the country's "Capital of Cars".

Its investment has paid off despite the challenges posed by competitors. Shanghai and Changchun also have two companies that compete against each other in sales. The Shanghai enterprise sold the most cars in China from January to April this year, while Changchun came in third. China has grown into the biggest and fastest-growing market for Volkswagen, whose Chinese name translates into "the mass of people".

Yan Jie, a spokesman for Volkswagen China, told China Daily website the reputation of the brand, the advanced technology and a comprehensive service network will keep Volkswagen competitive in the Chinese market.

Now the carmaker's business gained momentum when it was named the official automobile partner of the 2008 Olympic Games.

But Volkswagen still faces difficulties imposed by a stagnant world market and tackling problems in coordinating its two Chinese enterprises more efficiently under a brand name.