时间：2022-10-06 06:58:10
Audi is going to increase its investment in China to create an era of “great leap forward” for itself.
The German luxury automakers began to fuel up in the Chinese market. Benz declared the plan of investing 27 billion yuan (USD 4.05 billion) in China to increases its sales volume to 300 thousand units in 2014. Then, Audi also made an announcement which seemed crazier it plans to sell 1 million units of autos in the next three years.
That means that Audi has to sell 330 thousand units in a year. This sales volume equals the one of Huachen Auto, whose sales was ranked at the ninth place in China.
Audi has worked out a grand plan. But unstable factors exist in the market environment, production, research & development and sales. Can Audi realize this goal?
The goal of selling one million units
“The next one million units of Autos will be sold in the next three years,” said an insider from Audi’s sales department on October 21 in Changchun, Jilin. Though the temperature there has dropped to 0 degree, this vow still caused warm discussions among people present in the conference.
In the first three quarters, Audi sold 173 thousand vehicles in China. It is certain that this year’s sales volume can exceed 200 thousand units. However, in order to sell 1 million units in the next three years, Audi needs to sell 330 thousand units each year, which means that the annual increase to the sales volume should be at least 25%, higher than the average increase in the past five years. When the sales volume keeps increasing, it is hard to maintain such a high growth rate.
“Another 1 million units of Audi autos will be sold in the next three years,” said An Tiecheng, general manager of FAW-Volkswagen, which is responsible for assembling and selling Audi vehicles in China.
“If the policy about stimulating the vehicle consumption is cancelled next year, the market will return to the normal growth rate. We think that China’s luxury auto market will grow at 40% per year,” said Zhang Xiaojun, vice general manager of FAW-Volkswagen’s Audi Sales Department. According to his estimation, more than 900 thousand luxury vehicles will be sold in one year. In the developed foreign auto market, the number of sold luxury vehicles usually takes 15% to 20% of the whole auto market (in China the proportion is 6% to 7%). If China’s auto market can reach this level, about 2 million luxury vehicles will be sold by 2013.
“Is Audi crazy?” A middle-level manager from BMW China said.
Localization as guarantee
In 2007, Audi’s sales volume in China for the first time reached 100 thousand units, up 24.8% from a year before. In the next two years, Audi sold 120 thousand and 160 thousand vehicles and the increase rate was 17/08% and 33%. Supposing Audi has sold 21o thousand units in 2010, it has to sell 262.5 thousand units in 2011, 328 thousand units in 2012 and 410 thousand units in 2013 to realize its goal. The annual growth rate should be maintained at 25%.
Though keeping the growth rate at 25% seems to be an easy task especially when China’s luxury auto market is forecasted to increase by 40% year on year. But it is necessary to know that Audi spent 22 years selling the first one million units in China. In addition, the forecast is likely to be wrong.
“It is a great challenge for me to sell one million units in three years,” said Zhang Xiaojun. But he said simultaneously that Audi’s strategy of “localizing whole value chain” is the root of realizing this goal.
The so-called strategy of “localizing whole value chain” means localizing the whole value chain of products (including R&D, production, components purchasing, marketing and brand image building). Based on this strategy, Audi will improve its localization through buying more components from local suppliers, adjusting new models to China and expanding marketing channels through introducing.
This strategy sounds similar with Benz’s strategy. Not long before, Daimler’s board chairman Dieter Zetsche once said that Benz was going to increase the contribution of local partners to its total sales volume. In 2015, 67% of the Benz vehicles sold in China will be made in China.
Although Audi’s plan of selling 3 million vehicles per year sounds unbelievable, an insider from BMW (China) confirmed the important role of domestic-made vehicles for the future luxury vehicle market. “By the end of this year, half of BMW autos sold in China will be made in our Chinese plants.”
According to an insider from FAW-Volkswagen’s Audi Sales Department, the engineers have already begun to work on the localization of Tiptronic gearbox which is widely used in Audi vehicles.
Unsecured Future
Nevertheless, improving localization is not all Audi need to do to win the future.
“The changes in this year’s luxury vehicle market show some clues about the future,” said the aforementioned insider from BMW (China). This year, Benz instigated a price war, which was followed by BMW. However, Audi refused to take part in. This meant that Audi was still in a disadvantageous place compared with Benz. Ordinarily, only the brands with advantageous positions can lower the price or else the brand image will be damaged. “If Benz and BMW have more cars made in China, they will get bigger space for lowering prices. This is a great challenge for Audi.”
Audi doesn’t admit that it has weaker competitive power than Benz and BMW, but it is far behind the two German peers in the field of imported vehicles, which could mostly reflect the brand advantages.
According to the data, the sales volume of imported vehicles of took 3% of Audi’s total sales in China in the past 22 years. In comparison, the proportion for Benz and BMW was respectively 68% and 57% in the first quarter of this year. According to the original plan, Audi will launch its flagship product A8L in China at the end of year. But it is said that the plan was postponed to the beginning of next year.
“The small volume of imported vehicles means that domestic-made autos are the key for Audi to realize the goal of selling 3 million vehicles per year,” said the expert.
Actually, it is also an uncertain factor for Audi to increase the sales of domestic-made vehicles. Right now Audi can produce 200 thousand units each year, which is close to the saturation point. It is not until the end of next year that the new plant in Chengdu can be put into production. Another new plant in Foshan, Guangdong, is said to be opened in 2013. This means that Audi will suffer insufficient production capacity in 2011. Nevertheless, at least 260 thousand units should be produced in 2011 to lay a solid foundation for the 2012 and 2013 plans.
“We know Audi’s plan, but we also know that China’s auto market has many unsecured factors in the future,” said Nozaki Shoju, executive vice president of Toyota (China) in charge of the sale of Lexus in China. “We expect that the annual increase will be around 20%.”
Can Audi realize its plan with the interior and exterior uncertain factors?