Audi, SAIC team up on sales

Mod­els to be pro­duced by JV in­clude new-en­ergy ve­hi­cles, ven­ture will ex­plore the pos­si­bil­ity of smart mo­bil­ity ser­vices

China Daily (USA) - - BUSINESS - By LI FUSHENG li­fusheng@chi­nadaily.com.cn

Audi AG has joined hands with China’s largest au­tomaker SAIC Mo­tor to lo­cal­ize and sell its mod­els, a move to con­sol­i­date its be­lea­guered lead in the coun­try’s pre­mium car mar­ket.

Shanghai-listed SAIC Mo­tor said in a let­ter to in­vestors on Mon­day that it signed a memorandum of un­der­stand­ing with Audi’s par­ent com­pany Volk­swa­gen AG at its head­quar­ters in Wolfs­burg, Ger­many, on Fri­day.

Ac­cord­ing to the agree­ment, the Audi mod­els to be pro­duced at SAIC Volk­swa­gen will in­clude new-en­ergy ve­hi­cles and the joint ven­ture will ex­plore the pos­si­bil­ity of smart mo­bil­ity ser­vices.

Audi was tightlipped about the is­sue, say­ing that SAIC Mo­tor “en­tered co­op­er­a­tion talks with Audi AG to eval­u­ate long-term col­lab­o­ra­tion in China”.

Al­though nei­ther side of­fered de­tails about their co­op­er­a­tion, Chi­nese me­dia re­ports said SAIC Volk­swa­gen will man­u­fac­ture Audi mod­els as OEM.

As part of Volk­swa­gen AG, Audi is not al­lowed to build its own man­u­fac­tur­ing joint ven­tures in China as Volk­swa­gen has al­ready two: SAIC Volk­swa­gen and FAW Volk­swa­gen.

Ac­cord­ing to the na­tion’s in­dus­try poli­cies, a for­eign au­tomaker can have no more than two man­u­fac­tur­ing joint ven­tures in China, and if one au­tomaker has con­trol­ling stakes in an­other, they are re­garded as one au­tomaker.

Audi has been the cham­pion in China’s pre­mium car mar­ket, but it is los­ing steam com­pared to its com­peti­tors.

Statis­tics show that Audi sold 440,233 cars on the Chi­nese main­land and in Hong Kong in the first nine months of this year, 6.2 per­cent growth year-on-year.

In com­par­i­son, BMW’s sales in the same pe­riod rose 10.6 per­cent year-on-year to 379,000 units, and Mercedes-Benz sold 344,791 units in the same pe­riod, a 29.5 per­cent surge year-on-year.

FAW Volk­swa­gen, in which Audi has a 10 per­cent stake, is now lo­cal­iz­ing and sell­ing Audi mod­els in­China.

Li Yan­wei, an auto an­a­lyst at the China Auto Deal­ers As­so­ci­a­tion, saidGe Shuwen, for­mer deputy gen­eral man­ager of FAW Volk­swa­gen’s Audi di­vi­sion, may join SAIC Volk­swa­gen to head its Audi unit.

In­dus­try in­sid­ers said Audi has to care­fully tackle the prob­lem of how to bal­ance its re­la­tions with the two part­ners.

Audi said onMon­day that the two will in­ten­sify their co­op­er­a­tion and FAW-Volk­swa­gen will add five lo­cally pro­duced Audi e-tron mod­els to its China port­fo­lio— in­clud­ing pure bat­tery ve­hi­cles with a range of more than 500 kilo­me­ters, within five years.

“Audi and FAW have co­op­er­ated closely for more than a quar­ter of a cen­tury. With our long-term growth strat­e­gywe will build upon this suc­cess­ful part­ner­ship,” said Ru­pert Stadler, chair­man of the board of man­age­ment of Audi AG.

Audi deal­ers, who were not in­formed of the deal in ad­vance, are voic­ing their anger, de­mand­ing a re­sponse from Audi about how to pro­tect their in­ter­ests.

A pub­lic let­ter from the CADA Audi Deal­ers As­so­ci­a­tion said some deal­ers are faced with high in­ven­tory and “the in­ter­ests of Audi deal­ers will be fur­ther dam­aged if you set up a newsales com­pany”.

There are cur­rently around 500 au­tho­rized Audi deal­ers across the coun­try.

REUTERS

A woman takes pic­tures of her­self with her mo­bile phone in­side an Audi car dur­ing the 16th Shanghai In­ter­na­tional Au­to­mo­bile In­dus­try Ex­hi­bi­tion in Shanghai.

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