The Audi A3 is one of several models that VW will produce in its latest brand-new factory in China. The Audi brand is the leader of China's huge -- and hugely profitable -- luxury-car market, where GM's Cadillac is so far just a bit player. Photo credit: Audi

China has been an immense success story for General Motors (NYSE:GM). For the last several years, GM has held the number one market position in the world's biggest auto market -- a position that adds billions to GM's bottom line every year.

GM is still doing well in China, but its market-leading position is under threat. That's because Volkswagen (NASDAQOTH:VLKAY), the longtime second-place player in China, is out to take the lead -- and it's spending billions to make that happen.

Volkswagen's latest move is a big push into southern China, a region where Japanese brands like Toyota (NYSE:TM) and Honda (NYSE:HMC) have been strong -- but VW thinks it can be stronger. In this video, Motley Fool contributor John Rosevear looks at VW's latest moves to gain ground in China -- and at why this move could mean trouble for GM in this huge and important market.

Fool contributor John Rosevear owns shares of General Motors. You can connect with him on Twitter at @jrosevear.The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.