Honda Motor Co. is following General Motors with plans to transfer a production platform to one of its domestic partners, a Honda engineer says.

The move will engage Honda in a contest between a trio of China's biggest carmakers, each hoping to grab share of a new market growing in the country's interior.

According to a Honda engineer, Honda is transferring to its joint venture Guangzhou Honda Automobile Co. the platform from which Honda produced previous versions of the City subcompact sedan. Guangzhou Honda will use the platform to develop an economy sedan under a new brand called Linian.

GM is planning something similar. Supplier sources say the U.S. carmaker is transferring the platform for its Buick Excelle, an aging compact sedan due for replacement. GM's Liuzhou affiliate, SAIC-GM-Wuling Automobile, will use GM's technology to develop a car under a new brand. It will be launched in two years' time with a price tag that is far lower than any compact sedan offered in China by a global automaker today.

Volkswagen, meanwhile, has shifted some production of two old economy sedans -- the Santana and the Jetta -- up the Yangtze River to Nanjing and Chengdu. With lower production costs and less distance to market, this move will enable the German automaker to cut prices and supply cars more cheaply to China's interior.

Far away from the seaboard where the car market exploded at the decade's beginning, average annual disposable incomes in provinces such as Sichuan, Shaanxi, Gansu and Yunnan is now nudging $1,000 (6,846 yuan) per year. For automakers and their marketing departments, this is the magic number at which a car becomes an affordable purchase.

At GM, a manager explains his company's strategy. "China is not one car market like the U.S.," he says. "It's two or three put together; like Western, Central and Eastern Europe all rolled into one."

"It's about looking at the gaps in your product portfolio and filling them to meet any opportunities that are there," the manager continues. "If a vehicle with none of the latest bells and whistles is needed, it can make sense to give the required tools to your partner. They can do a great job of building a basic car."

At the Shanghai office of strategic consultants AT Kearney, principal Steve Dyer says it's all about the uniqueness of China.

"China is now approaching the U.S. in terms of production scale. But there are far greater regional differences in incomes here," says Dyer. "That creates demand for a spectrum of different grades of product that you won't see anywhere else in the world."