Double or quits for Audi in China
Bold two-pronged strategy aims to reverse falling sales for the German giant in the crucial Chinese market
Chinese buyers are turning against Western car manufacturers in favour of innovative, high-tech products from local brands. But Audi is not giving up the world’s biggest car market without a fight. Or rather, two fights.
It’s been in the country for more than 20 years, and like many Western car makers has offered a mix of global products and others tailored to local tastes. In that tradition, it has just started building new China-only models at a new factory in Changchun, in conjunction with long-standing Chinese automotive partner FAW.
But that’s only half the story. It’s also in partnership with a different Chinese company, the tech-orientated SAIC, on a project aimed at a different, younger, Chinese demographic.
The first visible sign of that SAIC project was recently unveiled: a concept car, close to production-ready, called the AUDI E. Note the typography: for this part of its hoped-for China revival, Audi is going uppercase and ditching the long-serving four-ring logo.
‘The most important aspect for Audi is direct access to this rapidly advancing technology’
That may not sound particularly significant, but it symbolises a focus on the booming 30-35-year-old part of the Chinese car-buying public – a group that has different priorities from the often more conservative older generations and is less attached to old brands. Younger drivers don’t want to be seen in the cars their parents aspired to.
The E concept – a sportback with two electric motors and quattro all-wheel drive, claiming 600 miles of range when fitted with solid-state batteries – previews three different electric-only models that Audi and SAIC will start to launch this year. If that sounds very quick, that’s the point: SAIC, like many Chinese tech and automotive firms, develops and launches new products much more rapidly than European manufacturers are used to.
The concept’s underpinnings are based on hardware and software used in SAIC’s high-end IM-brand cars, featuring city-level autonomous driving ability and plenty more.
The most important aspect for Audi is direct access to this rapidly advancing technology, which enables them to take years off the product development life of its cars, as well as enjoying the cost benefits of developing a product entirely in China.
It’s a relatively easy way for Audi to maintain presence and relevance in the world’s largest car market, without going to such wild extremes as Jaguar.
Will the new AUDI cars be different enough? Only time will tell.
Meanwhile, for those with more traditional tastes, that FAW joint venture is making cars on Audi’s PPE platform at the new Changchun factory. First off the production line are the long-wheelbase Q6L e-Tron and Q6L Sportback e-Tron. China-specific variants of the A6 e-Tron are set to follow.
Why the obsession – which extends way beyond Audi – with long-wheelbase cars in China? In Audi’s case, it’s a strategy that has served it well since 2003, when it was ahead of its German premium rivals in locally building a stretched version of a heartland saloon, the second-generation A6, dubbed A6L.
These long-wheelbase variants of premium German saloons, not offered elsewhere in the world, were created in China for two reasons.
Firstly, they were built locally, together with their joint-venture partners, to circumvent the high taxes on premium products imported into China. In Audi’s case that first partner was FAW, owners of the Hongqi brand that transports the Chinese president around. It had been selling stretched, Hongqi-badged Audi 100s since the late ’80s.
Which brings us to the second factor behind these long-wheelbase China-only models: the preference in China for greater legroom in the back. This is partly for reasons of prestige and partly because of the tradition of deference within families.
Historically, it was the country’s elite that travelled in limousines, so longer cars give a feeling of grandeur. Culturally, Chinese often travel in three generations, and it’s the grandparents and kids who get to sit in the back, and the preference is to give them the luxury experience.
Will the new two-pronged strategy work? It’s certainly worth a try. In the first nine months of 2024, Audi’s sales in China and Hong Kong were 8.5 per cent down on the previous year. The figures are even worse when you look at Audi’s electric cars. In that period, fewer than 15,000 locally built Q4 and Q5 e-Trons found homes in China. Compare that to a model like the Zeekr 7X, which sold over 30,000 in less than three months, and you begin to see the problem.
The unparalleled surge of China’s electric vehicle industry over the past five years has been driven by China’s 20- and 30-somethings. Where the average age of an Audi customer in the rest of the world is 55 years old, in China it’s 30-35, and this new generation of Chinese consumers is growing up in a world far removed from that of their parents and is looking to differentiate themselves from their elders.
Unscarred by the ghosts of China’s automotive past – with questionable build quality, suspect engineering, and models often loosely built on discontinued imported models – China’s new generation is seeing what China is capable of today in real time, and they’re savvy to what’s available on the market.