Competition in China auto market is increasingly fierce while local manufacturers compete with global firms in prices and business, wrote the Wall Street Journal. The fall in car prices has come despite surging demand. Passenger-car sales climbed more than 36% in the first six months of the year, compared with the same period in 2005. General Motors cuts the price of its Buick Regal roughly 10% earlier this year, in part to stave off inroads by Toyota Motor, which started making its Camry sedan in China in May, as well as by cheaper Chinese brands. Among the companies best positioned to cope with the heightened competition, analysts say, are Japanese manufacturers, whose China ventures are gaining strength, as well as cost-advantaged local firms, said the paper. Grace Mak, an analyst at Merrill Lynch in Hong Kong, told the Wall Street Journal that investors looking for exposure to the China car industry put money in Denway Motors, Geely Automobile Holdings and Dongfeng Motor Group, all listed in Hong Kong. Sales of smaller cars are rising more rapidly than sales of larger models. In 2005, cars priced below $12,000 were the fastest-growing part of the market, according to Automotive Resources. That trend is likely to accelerate, as the government seeks to encourage fuel economy by raising taxes on large vehicles and lifting the price of gasoline, suggested the Wall Street Journal.