In side-by-side storefronts in Hong Kong’s Wu Chung House on Queen’s Road East, two new establishments have opened in recent weeks where not long ago there was a Fat Angelo’s Restaurant. Half of the former spaghetti restaurant features the 2012 McLaren MP4-12C, which is rated at 592 brake horsepower and features a price somewhere north of US$250,000.

The car has a top speed rated at 330 km/hour, which probably means it isn’t intended for Hong Kong’s congested streets, where mostly speed is limited to 80 km per hour although drivers are allowed to shake it out as high as a sedate 110 on the motorway to the international airport at Chek Lap Kok.

The other half of the former restaurant is occupied by three Rolls-Royce sedans. Half a block away, a space formerly occupied by a Fortress appliance shop was taken over last August by Mercedes-Benz. Claus Weidner, Mercedes' chief operating officer, and Michael Lee, CEO of joint venture Zung Fu Co., introduced the new high-performance C 63 AMG Coupé to the clatter of a traditional lion dance. Also available are super-luxury Maybach sedans.

How many of any of these cars will be bought by Hong Kong’s super rich is debatable. It is more likely that they are there to attract the hordes of rich from over the border. Last week, a rung or two down from the super expensive marques, Infiniti, Nissan’s luxury brand, announced that it is relocating its global headquarters from Japan to Hong Kong to get closer to the China market, joining Audi AG, Mercedes-Benz and BMW AG.

The Nissan brand’s sales climbed by almost 40 percent in 2011 to 19,000 units, making it the second biggest market for Infiniti in the world after the United States. The company plans to increase dealerships in China from 25 to more than100 over this year, according to a statement by Andy Palmer, the Nissan executive vice president in charge of Infiniti.

As with Nissan, Volkswagen announced yesterday that it would create a new board of directors’ position to manage all business in China, according to an Associate Press dispatch. Volkswagen AG is Europe’s biggest carmaker, including Volkswagen, Audi, Lamborghini, Porsche, Skoda and Bentley. The company sold 2.3 million cars in China last year, resulting in a €2.6 billion operating profit. "We want to further increase our pace there," said Volkswagen group chief executive Martin Winterkorn.

With the Eurozone sinking into crisis, carmakers are turning to China, which has become the biggest market for Audi, Volkswagen, BMW and other carmakers. The top-selling car in the world's largest auto market last year was the Buick Excelle, built by the General Motors joint venture and a healthy profit center for the once-distressed American carmaker.

The fact is that despite fading car sales in China, with manufacturers forcing dealers in a half dozen major provinces to take on ever more cars, the top end of the market is continuing to be healthy while the 1-1.6 liter segment faces challenges.

Competition for China’s nouveau-riche buyers has new marques encroaching on the German and Italian manufacturers who have had luxury sedan and sports car sales largely to themselves over the past decades, according to a survey by Research-Works, the Shanghai-based financial research firm that tracks car sales.

However, Infiniti isn’t alone. Other brands such as Volvo, Cadillac and Honda’s Acura are also making plans to gain a foothold in China’s luxury market despite the fact that the slowing economy has meant that sales have fallen from 40 percent growth to a still heady 15 percent to 20 percent for 2011.

The Big Three German carmakers - Audi, BMW and Mercedes-Benz, have dominated Chinese luxury sales with more than 70 percent between them. Audi is the big winner, according to Research-Works, selling 313,036 units in 2011. The company announced in late May that it would possibly begin to market its new Q3 crossover officially sometime this month. It is expected to be priced above the domestically manufactured Q5, with estimates ranging between 400,000 and 450,000 yuan ($63,366-$71,287). Domestic production of the Q3 is anticipated to be a part of its future Chinese plans.

Audi actually entered China early in 1988 and launched its flagship A6 in 2000, eventually bringing production costs below those of its rivals, BMW and Mercedes. While the skeptics are saying the Chinese car market has hit its limits of growth, by the end of April Audi had sold 78,487 Audis in Germany – and 87,487 in China. The company’s plant in Changchun has more buyers than cars.

By 2011, the production capacity of first-tier luxury car makers reached 490,000 units. Furthermore, German automakers are aggressively boosting production. Audi’s new plant in Foshan in Guangdong will join its existing plant in the northeast city of Changchun by 2013. Meanwhile, BMW is expanding two plants in Shenyang.

However, as new carmakers move in to manufacture locally, price competition has already begun. In February, Mercedes cut the price of its S300 by more than 20 percent, from 930,000 yuan to 700,000 to attempt to increase its market share, which kicked off a price war between the Großer Drei. That can be expected to probably have two results.

First, more buyers will upgrade to become luxury car users as prices fall. Second, Research-Works says, market competition will become stiffer with more newcomers in the next couple of years, which could cut into luxury manufacturers’ margins in the long run, probably permanently.

Down the market, things look considerably less exciting. Research-Works’ monthly survey for May saw sedan sales rise 9 percent annually in April but were still off 6 percent from March, which was a strong month. Fuel prices have begun to fall as strapped buyers don’t go near the pumps as often.