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VW v Mercedes!?

Just my brief 2 pfennigs, just what models in the Mercedes line up do VW
intend to compete with? I can see (just about) the logic in a Passat v
small Mercedes estate battle. After following an S500 down the A4 into
London this morning though I'd be interested to hear VW's plans for its
competitor. I'd far rather drive a 4.2 S8 quattro than an S500 any day of
the week (chance'd be a fine thing), its got to be about half the price as
well? I would suggest even a five year plan would be insufficient time for
such a marque attack from VW without extensive borrowing from the Audi A
series parts skips, where did these rumours originate from?

Being a would be ecologist I don't expect to understand much about car
marketing but I would be surprised if these suggestions about the VW /
Mercedes tussle are true. Why start them?

Graham "skeptical about rumour mongering" Thackrah.