Is Audi’s “A8 Kingdom” In Jeopardy?

Volvo’s Government Connections, BMW’s Flashiness Working In Their Favor Even As Audi Surpasses Sales Goals

The favored vehicle for Chinese officials, but for how long?

The favored vehicle for Chinese officials, but for how long?

We’ve made more than a few mentions of the ubiquitous black Audi sedan seen spiriting Chinese government officials around town throughout the country, but over the past several months the dominance of this long-time status symbol has shown signs of erosion. Though sales figures remain stellar, and Audi recently sold its millionth car in China — becoming the first luxury automaker to do so — and plans to double its dealerships by 2013, German rivals BMW and Mercedes-Benz have proven comparatively nimble in the China market, localizing models and introducing special China-only editions far more quickly than Audi.

As a result, Mercedes and BMW have caught on more with the country’s fast-paced entrepreneurs and nouveau riche, while Audi has developed more of a reputation for being somewhat stodgy and old-fashioned. (Although, it must be said, much of this simply derives from its bureaucratic connotations.)

But Audi’s greatest threat may come not from its German competitors but from the now-Chinese-owned Swedish marque, Volvo. As Jing Daily predicted when Volvo’s sale to Geely closed this summer, though China-made Geely Volvos may be a tough sell — as wealthier Chinese consumers have shown a general preference for the perceived exclusivity of imported vehicles — the company may have more luck selling cars to the government:

One [opportunity for Geely] is the potential to solidify its position among Chinese automakers through huge expansion of the Volvo name and presence in China, possibly cutting deals with the Chinese government to replace the ubiquitous black Audis seen driven by government officials throughout the country with China-made Volvos. While selling made-in-China Volvos may be more difficult than many imagine, depending on the consumer in question, [Geely Chairman] Li Shufu will certainly have an easier time trying to sell fleets of Volvos to the government than ever before.

Today, Bloomberg looks at the possibility that Audi will be further squeezed by Volvo as Geely pumps millions into new R&D facilities and dealerships. Much as Jing Daily noted this summer, localization will be key to Volvo’s success in the market, and the now-Chinese-owned company has already planned a raft of new features that Chinese drivers find the most attractive. From Bloomberg:

Volvo Cars, the automaker owned by Zhejiang Geely Holding Group Co., plans to hire a team of designers in China to cater to local tastes as the Swedish manufacturer prepares for its next model.

The designers would work at a research center being set up in Shanghai’s Jiading district, said design chief Peter Horbury. Volvo’s next model, co-designed by Horbury and predecessor Stephen Mattin and planned for 2012, will be in the premium compact segment, said Per-Ake Froberg, a Volvo spokesman. Rival vehicles would include Audi’s A3 and BMW’s 1-Series.

“If the Chinese or the Americans want more chrome on the grille, why would we say no to that just because we don’t have that in Sweden?” Horbury, 60, said in a Nov. 1 interview at Volvo’s headquarters in Gothenburg. “In a global market there’s still a cultural difference in tastes and requirements.”

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