Audi steps up efforts to bolster China presence

People inspect the Audi e-Tron 5S Quattro at this year's Paris auto show in France. [Photo by Benoit Tessier / Reuters]

Premium carmaker expects annual sales in country to reach 1 million units

As BMW's majority stake in its Chinese joint venture makes headlines, Audi said it has no intention to follow suit - but will step up efforts to strengthen its presence in China, its largest market.

"There is no change in our plan. We have worked together with FAW-Volkswagen very successfully in the last 30 years, and we intend to do that also in the future," said Alexander Seitz, an Audi board member responsible for China operations, last Wednesday.

Audi was the first premium carmaker to start localized production in China. It now holds a 10 percent stake in its joint venture FAW-Volkswagen, which produces about 90 percent of all Audi-branded vehicles sold in the country.

Seitz said Audi does not have plans to raise the equity it holds in its second joint venture, SAIC Volkswagen. Audi acquired a 1 percent stake from its parent company Volkswagen AG in July.

"We do that together with Volkswagen Group, so we have a 50-50 joint venture, and the intention is to have this joint venture structure also in the future when it comes to sales company and so on," said Seitz.

But Audi has worked out an aggressive development plan in China, which is the most important market for it in terms of both sales and profit margins.

It sold 600,000 vehicles in China last year, and its deliveries from January to September this year totaled 481,387 units, up 15.5 percent year-on-year.

Audi expects its annual sales in the country to reach 1 million over the coming years.

Among its other efforts, the German carmaker plans to introduce 10 new energy vehicle models to China by 2022 and double the current number of localized models by that same year, according to Thomas Owsianski, president of Audi China.

He said Audi's first electric SUV, the e-tron, will be introduced to China next year and be locally produced at FAW-Volkswagen from 2020.

By 2022, Audi plans to have five localized new energy vehicle models.

Even more importantly, Audi is taking steps to move some China-related functions into the country, said Owsianski.

"In every global company you have a unit that manages or steers local business, and that responsibility at the start was almost 100 percent at Ingolstadt (Audi headquarters, in Germany), but I think even the best people will find it difficult to help support or manage a business 10,000 kilometers away," he said.

"We are going through our businesses to look at what activities should be done in Ingolstadt and what should be done in China, and obviously the result will be that a lot of activities should be either partially or to a high degree moved to China, in particular research and development."

Audi China already has one R&D facility in Beijing, and plans to build another in Wuxi, Jiangsu province, in 2019.

The facilities will have a special focus on autonomous driving, digitalization and new energy vehicles, said the carmaker.

They now employ about 280 engineers, a number that is expected to more than double to 650 by 2023.

Audi has now obtained licenses to test autonomous vehicles in two Chinese cities - Wuxi and recently Beijing - and has partnered with China's Huawei Technologies to develop the technology in the country.

"We aim to provide our Chinese customers with smart driving technology that is adapted to China's road conditions," said Owsianski.