Audi puts brakes on its ambition to sell 600 000 cars in China this year

AUDI had abandoned a target to sell 600 000 cars this year in China, its biggest sales region, as the country’s stock market rout sapped demand for luxury vehicles, two people familiar with the company’s plans said.

The German car maker would provide an update on the market situation when it announced first-half results on July 30, said the people, who asked not to be named because the information was not public. Audi’s Chinese sales rose 1.9 percent to 273 853 cars in the first half.

“We’re monitoring the market very closely and anticipate further growth in the mid and long term,” the Ingolstadt-based unit of Volkswagen said in a response to questions.

Casualties

Audi said at the Shanghai auto show in April that its annual sales in China including Hong Kong, which hit 578 932 cars last year, were poised to reach 600 000 for the first time in 2015.

Since then, the Chinese automotive market has joined a long list of economic casualties as a stock market in free-fall spooked consumers. Jaguar Land Rover cut prices and sales targets on Tuesday.

“Basically Audi are saying that the rest of the year will be pretty much flat,” Arndt Ellinghorst, a London-based analyst at Evercore said in a note. After more than tripling its Chinese deliveries since 2009, the brand was facing the slowdown as its bestselling A4 sedan was ageing, he said. It will present a revamped version of the A4 in September.

Audi is China’s best-selling luxury-car maker and the world’s second largest after BMW. It is also the biggest profit generator at parent company Volkswagen.

The slowing Chinese economy and equity market losses have also led to concerns about the sales prospects of products as diverse as Apple’s iPhone and construction equipment from manufacturers, including Caterpillar and Swedish truck maker Volvo.

Growth in China, where car sales declined in June for the first time in more than two years, is vital for Audi’s plan to overtake BMW worldwide by the end of the decade. Both companies lost ground in the country last month to Mercedes-Benz, which is also fighting for the top global spot in luxury cars.

BMW had “moderately” adjusted the expansion plan at its plants in Shenyang as the Chinese market was “normalising”, the Munich-based company said.

“We will continue to grow our production volume over the base of 2014 but slowing down the speed of growth.”

Audi’s Chinese deliveries dropped 5.8 percent in June, while BMW sales slipped 0.1 percent. Mercedes-Benz sales jumped 39 percent to 32 507 units.

Mercedes said it still planned to deliver more than 300 000 cars in China this year.