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Audi Cements Market Position

Audi, one of the world's top luxury car makers, is to further cement its leading position in China's premium car market by introducing its latest models to the nation, localizing manufacturing, and further expanding its sales network.



Official statistics show that Audi, part of the Germany-based Volkswagen Group (VG), currently commands over 70 percent of China's high-end sedan market, and the country has become the firm's third largest export destination, after the United States and United Kingdom.


Audi's dominant slice of the domestic market may fluctuate with the entry of new competitors, but the company will keep China its key business area given the huge population and market performance, according to Erich Schmitt.


Schmitt sit on the board of Audi AG and is responsible for global purchasing, finance and Audi's China business.


Audi's 2004 financial report released last month showed the luxury car giant's sales in China set a new record of 64,018 units, up 0.8 percent on the previous financial year.


This is in stark contrast however to the company's 2003 sales growth, which stood at 78.9 percent year-on-year. Schmitt attributed the sharp drop to the slowing car demand in China, restricted auto-loan policies and exchange rate pressures.


"Despite this, vehicles with the four-ring badge remain very popular in China," he told China Daily.


Last year, in a readers' poll conducted by the Chinese magazine "Auto Pictorial," Audi was voted the brand with the best image in China and awarded "Best Preferred Brand 2005."


To accelerate sales and cater to the wants of Chinese consumers, "we are to promote a more up-market mix of models and specifications, such as the A4 saloon and Avant, the A6, the A3 Sportback and the 12-cylinder A8," said Schmitt.


However, he declined to reveal the company's 2005 sales target.


Audi has teamed up with local firm China FAW Group Corporation, one of the country's leading auto firms and based in Changchun, capital of Northeast China's Jilin Province.


"FAW boasts the latest Audi technologies, high-quality human resources and world advanced manufacturing facilities, which guarantees the cars made in China will be of the same quality as those produced by Audi's German plants," said Schmitt.


Insiders pointed out that Audi's collaboration with a domestic company will help the firm maintain its dominant position in China's rapidly expanding premium car market, as BMW and Mercedes Benz, Audi's stiffest competitors on the world stage, mount campaigns to increase their share of China's market.


Audi China currently runs a 112-outlet sales network nationwide, which is expected to be further expanded and upgraded.


"Sales growth should be accompanied by service quality improvement," said Schmitt. "We not only provide luxury cars but also premium services for our customers."


As Audi's global sourcing supervisor, Schmitt is working to promote the export of China's auto parts and accessories.


"We should provide opportunities for China's qualified producers," said Schmitt, adding that suppliers for Audi China are anticipated to be brought into the company's global sourcing system and take part in the manufacturing of Audi's newest models outside China.


The Audi brand set a new worldwide sales record in the last fiscal year for the eleventh successive year: by 1.2 percent to 779,441 vehicles.


Audi Group's revenues jumped 4.7 percent to 24.5 billion euros (US$32.47 billion). Profit before and after tax rose by 3.7 percent and 7.4 percent respectively to 1.142 billion euros (US$1.51 billion) and 871 million euros (US$1.15 billion).


(China Daily March 3, 2005)


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