While sales of imported luxury cars are growing in Shanghai, dealers of low and medium-priced imports are struggling to compete with domestically produced rivals.

Shanghai Waigaoqiao Automobile Exchange Market Co Ltd, which manages the city's largest imported car exchange, sold 1,036 imported vehicles last month, an increase of 99.2 percent from a year earlier.

Luxury sedans and sports utility vehicles were responsible for the bulk of that increase, according to the company.

The company's bestseller last month was the Mercedes-Benz S350. It sold 114 of the cars for an average price of about 1.37 million yuan (US$165,000) each.

"Demand has kept booming over recent months in spite of price increases," said Bai Yingxin, a company official.

"There is already a very large group of private business owners in China, and many of them believe that the brand image of imported cars, especially luxury cars, can better represent their social status. That is the reason for the strong demand,"said Yale Zhang, an analyst of Automotive Resources Asia Ltd.

Analysts note, however, that increased sales don't necessar-ily mean higher profits for car dealers.

"Imported cars at middle and low-price level (usually below 400,000 yuan) are becoming less attractive as many new domestically made models were launched in recent months," said Xu Zhiyuan, a marketing official from Shanghai Yongda Group, the city's leading car dealer.

"There is not too much difference in quality but the domestic models are much cheaper."

The poor state of the low-end import market has pushed a growing number of dealers to compete in the luxury market, making it far more competitive, said Xu.

China still sets a quota on the import of cars and car parts.

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