March 8, 2010

Audi Sales In China May Surpass Germany Within Year

Audi Sells Over 15,000 Automobiles In Mainland China And Hong Kong In February, a 62% Jump Year Over Year

China has been one of Audi's most loyal and profitable markets for the last 20 years

China has been one of Audi's most loyal and profitable markets for the last 20 years

The luxury car market is a contentious place in China, with the world’s top automakers throwing their weight (and money) behind massive marketing campaigns, and many increasing output at their joint-venture factories. For Audi, perhaps more than any individual manufacturer, the China market has been more than just an opportunity, it’s been a goldmine. As the first premium automaker to manufacture domestically in China, Audi has established a firm foothold in the country over the past 20 years, becoming synonymous with luxury in the minds of many Chinese car lovers.

A quick glance at Audi’s recent sales figures indicates why the company’s love affair with China should show no signs of fading any time soon. Of the 75,900 vehicles sold by Audi around the world last month, 15,108 were sold in mainland China and Hong Kong, compared to 15,647 in Audi’s home country of Germany. While these figures are impressive enough, it’s important to point out that this marks a 62% rise, year-over-year, in Audi China sales for that month. Analysts are projecting that, within the year, China will surpass Germany as Audi’s largest single market, a trend that’s not totally unexpected yet has major symbolic meaning.

From the Wall Street Journal:

In January and February [of this year], Audi sold 31,906 cars in China, up 86% year-on-year, compared with 27,304 cars in Germany, up 1.7%. Audi previously has said it expects China to become its largest sales region in 2012 or 2013.

China proved to be one of the few bright spots for luxury-car makers when demand evaporated in other major markets amid the economic downturn and is now driving the segment’s recovery.

Audi emerged from last year’s industry gloom relatively unscathed and narrowed the gap to its larger premium-brand rivals BMW AG and Daimler AG’s Mercedes-Benz marque last year due mainly to its strong presence in China and a smaller exposure to the troubled U.S. market.

Audi ranks third in global luxury-car sales behind BMW and Mercedes-Benz, but it retains a firm grip on the top position in China, which it gained thanks partly to the early market entry of its parent company. Audi plans to launch its A3 hatchback in China this year and aims to ramp up local production as well as expand its dealership network.

Audi seems to be planning smartly in China, with the introduction of more middle-class-focused models like the A3, which should appeal to younger urban buyers and help the brand get further away from its image in China as a car for middle-aged bureaucrats. However, as Jing Daily wrote last month, it’s not beyond the realm of possibility that Volvo — whose sale to China’s Geely Automobile should close within the next few months — might start to take Audi’s place as the de facto government vehicle — a potentiality that might dent sales a bit, but which could ultimately help the company appeal more to the growing twenty- and thirty-something middle class.

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