BizChina

Volkswagen AG and PSA Peugeot Citroën SA are considering developing China-only brands with their local partners in the country, people familiar the situation said, joining a growing trend among foreign auto makers targeting surging demand for low-cost cars.

Volkswagen is in discussions with one of its two Chinese partners about the possibility of starting a new jointly run brand, a person close to the German auto maker said.

"The talks have been going on for some time, and they are in their final stage," the person said. He wouldn't say which of VW's partners, SAIC Motor Corp. or FAW Group Corp., it is discussing the matter with, or otherwise elaborate.

Separately, Timothy Zimmerman, a senior China-based executive at Peugeot, said parent company PSA Peugeot Citroen of France is looking into an opportunity to start an additional brand for China and is discussing it with partner Dongfeng Motor Group Co.

"We want to pursue this only if there is a place in the market for it, and if it is profitable," the Beijing-based executive said. He said PSA Peugeot Citroen and Dongfeng have launched a joint study group to look into the move.

For many, the term nuclear power still calls to mind Three Mile Island and Chernobyl. Though both disasters occurred decades ago, the number of active reactors has been essentially frozen. Now, increasing power needs are ushering in a new era, with countries like China driving demand. The uranium market, stagnant since a steep drop in 2007, is picking up and companies tied to production and use of the material have been surging.

Investors had been further spooked by an explosive bubble in the uranium market, the metal used to fuel nuclear reactors. Spot prices, which had remained below $20 since Chernobyl, began an upward movement that in 2007 turned exponential. Fueled by financial speculation, prices went from about $70 a pound to over $135 by mid-year and then back down almost as quickly. Nick Carter of UxC Consulting explained that hedge funds and investors, buying into physical uranium, managed to inflate and pop a bubble which decimated investor confidence for years.

When, around mid June 2010, prices began to move up again, some feared it could be another bubble. The horrible correction suffered in 2007, though, seems to have put the market in its place. Fundamentals are the driving factor this time: supply is tight and demand is growing.

Nuclear power plant in Tianwan China

French auto maker Peugeot is likely to sell more cars in China's booming market than in its home market by around 2015, said Timothy Zimmerman, a China-based Peugeot executive.

Mr. Zimmerman said Peugeot, a unit of PSA Peugeot Citroën SA, is targeting to sell about a half million vehicles in China by 2015. If realized, the company's China sales are likely to exceed those in France that year or shortly after that, he said. In France, Peugeot sells about 400,000 cars a year, giving it a roughly 19% share of the country's market, he said.

China is the world's biggest car market by total vehicles sold—as well as the fastest-growing major market—and it is increasingly surpassing home-market sales for individual foreign car makers such as General Motors Co. and Hyundai Motor Co.

Passing France's sales volume in China "isn't a strategic objective for us," Mr. Zimmerman said in an interview over the weekend. It would be a result "we might eventually achieve as our sales in China expand."

In China, where PC maker Lenovo Group dominates with nearly 30 percent of market share, there seem to be few opportunities left for smaller players to significantly shake up the market in the short term. But Acer Group is obviously ready to take the challenge.

This year, the Taiwan-based PC maker has made several key deals, including acquiring Founder, a smaller Chinese competitor, in May and invested $150 million this month in the southwestern city of Chongqing to build a factory.

Acer says these moves are only a prelude to its aggressive expansion in the world's second-largest PC market.

Gianfranco Lanci, chief executive officer of Acer, sees China as still "having huge potential".

He said the company hopes to become the second-largest player in the mainland's PC market in the near future, following Lenovo.

He predicts China will surpass the United States to become the world's biggest computer market within three years.