Audi gathers new momentum in China

In an interview, CEO Markus Duesmann and Audi China President Werner Eichhorn talk about how Audi is expanding its presence in its largest sales market even further and about finding answers to special local requirements.

07/20/2021 Interview: Marius Holfert – Photos: AUDI AG  Talking Sustainable Business Reading Time: 5 min

Talking Sustainable Business Key Facts

  • Audi presented four world premieres at Auto Shanghai: the brand new concept vehicle Audi A6 e-tron concept, the completely redesigned Audi Q5L, the Audi A7L and an SUV study called Audi concept Shanghai that was still covered in camouflage wrapping. The last two of these vehicles are the first products of the new partner SAIC Audi.
  • Moreover, recently Audi and its Chinese partner FAW (First Automotive Works) founded a new company for fully electric cars: Audi FAW NEV Company.

China as a central pillar of success for Audi

Mr. Duesmann, shortly after you began as the new CEO at Audi in spring 2020, you also assumed responsibility for the company’s business in China. And in your role as president of Audi China, Mr. Eichhorn, you have been managing activities directly in China for about the same length of time. Was that the starting signal for a greater focus on China at Audi?

 

Duesmann: A customer has just taken delivery of the seven-millionth vehicle in China – an Audi e-tron. So you can see that Audi has been committed to China for a long time now. With our Chinese partner FAW, we have been successful locally for more than 30 years – and we were the first premium manufacturer to exploit the long-term potential of the Chinese market.

Over the course of time, the market has naturally become increasingly more important for the entire industry and for Audi, too – China is a central pillar for the success of Audi as a whole. At the same time, we’re concentrating on Europe and the US as well as China.

 

Eichhorn: Last year in particular highlighted the importance of the Chinese market once again. In spite of the challenges posed by the coronavirus pandemic, we delivered more than 700,000 vehicles there. That’s a new record!

This is why we are now consistently reorienting our business model to focus on customized solutions for China – in other words, more resources, know-how, decision-making competence and responsibility in the local market. And here we have reached important milestones, especially in recent months. 

“I see great open-mindedness toward new technologies in China and the will to implement innovations quickly.”

Markus Duesmann, Chairman of the Board of Management and Board of Management Member for Product Lines at AUDI AG

How are Chinese customers different from, for example, European customers?

 

Eichhorn: Chinese purchasers of premium cars are definitely much younger than in the EU. The average age in China is 35 and in Europe it’s 56. For 37 percent of the buyers, it’s the first car they have ever bought, whereas in Germany that’s true of less than one percent. The functions in the cars need to be closely aligned to the lives of this target group; infotainment and connectivity functions are thus very important. The models also need to meet premium standards overall and simply be fun to drive. An ongoing dialogue with our customers helps us keep all that in view. The Audi Innovation Research Office in Beijing has made an important contribution to this for several years now. With the help of our market research community, we collect customer feedback that flows into the development phase of our local products – in line with the motto: In China, for China! By the way, we use a similar approach in Germany and the US.

 

Mr. Duesmann, what can we learn from China?

 

Duesmann: China is an innovation driver in many areas and sets the pace for digitalization. As a fan of technology, it goes without saying that I find that particularly exciting. I see great open-mindedness toward new technologies in China and the will to implement innovations quickly.

 

And how does Audi keep up with the pace of digitalization in China?

 

Eichhorn: Together with local champions like Tencent, among others, we develop locally precisely those solutions that deliver the greatest added value for our customers. A good example are the new connectivity and infotainment solutions that are specially geared toward the Chinese market. They have been available since last year in local Audi models and enable the integration of the controls for popular Chinese apps directly in the vehicle. Moreover, we’re one of the first premium manufacturers in China with several test licenses for autonomous driving in selected cities. Our engineers have traveled thousands of kilometers in Beijing and the central Chinese city of Wuxi since 2018 to prepare the latest technical standards for connecting cars to the municipal infrastructure for series production.

New direction of the China strategy

Mr. Eichhorn already mentioned the new direction of the China strategy. What does it include?

 

Duesmann: In recent months we had a breakthrough on three key points in our strategic further development in China: For instance, we are building a new plant in Changchun for the production of premium electric cars for the Chinese market based on the Premium Platform Electric (PPE). For that purpose, we founded a company with our partner FAW – the Audi FAW New Energy Vehicle Company. With it, for the first time, we will hold the majority in a joint venture in China. 

The strategic realignment of China is based on three pillars

The strategic realignment of China is based on three pillars

Audi FAW New Energy Vehicle Company

Changchun

FAW Audi Sales Company

Hangzhou

SAIC Partnership

Shanghai

Eichhorn: We assume that by 2030 at the latest, around 40 percent of all the premium vehicles sold in China will be NEVs. With our future products, we’ll be optimally prepared for that. We’re already driving forward our e-offensive in China with determination: The fully electric Audi e-tron is meanwhile being manufactured locally by FAW-VW, the e-tron Sportback has just been launched on the market and the e-tron GT will likewise be delivered to China as an import vehicle. Together with the Q4 e-tron that we unveiled in April and other models from the e-tron family, we will produce five BEVs locally by 2025. By 2025, we will have seven battery electric vehicles in our portfolio in China.

 

What are the other two milestones you mentioned?

 

Duesmann: We have also clustered our sales and marketing activities in China in a new sales company, the FAW Audi Sales Company. Up to now, a division in the FAW-Volkswagen joint venture – the Audi Sales Division – was responsible for that, but now we have founded a dedicated company in which all the sales activities in China are brought together under one roof. It’s located in the city of Hangzhou in eastern China in the province Zhejiang, one of the country’s most dynamic and innovative regions and a hub for high tech and digitalization.

And the third important step so that we can position ourselves even more broadly in China is our cooperation with an additional partner, Shanghai Automotive Corporation (SAIC).

 

What are you hoping to gain from the partnership with SAIC?

 

Eichhorn: Together with our partners FAW and SAIC and the additional models arriving on the market in the near future, we can tap completely new segments, meet the needs of Chinese customers even better and continue our product offensive in China. SAIC is one of the most important manufacturers in the People’s Republic and has been a reliable partner to the Volkswagen Group for years. And with the partnership, we’re also acquiring a new production location in Shanghai.

 

 

You had four world debuts at Auto Shanghai. How do these models represent the new direction in China?

 

Duesmann: Auto Shanghai marked the first time we appeared with FAW and SAIC on a joint exhibition stand, and this close cooperation definitely stands for our new direction.

 

Eichhorn: We presented the future “made by Audi” together with these two partners. Part of this is the brand-new concept vehicle Audi A6 e-tron concept. This shows how elegant and dynamic our future models on the PPE platform will look. With a range of more than 700 kilometers, this car is a further module in our electric offensive. What’s more, we’re launching the Audi Q5L – one of our top-selling models with a long wheelbase – on the Chinese market in a newly revised version. This successful SUV will continue to be built in our Changchun plant as part of the FAW-VW joint venture.

Our new partner SAIC had a “home territory” advantage in Shanghai and likewise presented two newcomers: the fully electric SUV study called Audi concept Shanghai, whose series-production version will be unveiled during the second half of 2021, and the newly designed Audi A7L. This saloon is being built this year in Shanghai and will be available on the Chinese market starting next year.

Audi e-tron GT quattro: Power consumption, combined*: 19.6–18.8 kWh/100km (NEDC); 21.8–19.9 kWh/100km (WLTP)CO₂ emissions, combined*: 0 g/km

Audi e-tron GT quattro: Power consumption, combined*: 19.6–18.8 kWh/100km (NEDC); 21.8–19.9 kWh/100km (WLTP)CO₂ emissions, combined*: 0 g/km

“We assume that by 2030 at the latest, around 40 percent of all the premium vehicles sold in China will be NEVs. With our future products, we’ll be optimally prepared for that.”

Werner Eichhorn, President Audi China

World novelties Auto Shanghai

Outlook 2021

We have one last question: What are your expectations for the coming year in China?

 

Duesmann: Audi was able to sell more than 418,749 cars in China in just the first three months of 2021, and the positive trend continued through April and May. Despite the euphoria we naturally need to be cautious in our optimism owing to the semi-conductor issue and the persistence of the coronavirus pandemic. However, last year showed us that there is still great potential in the premium segment. China enjoyed overall growth here of nearly 11 percent compared with 2019, and the market for new energy vehicles is continuing to grow as well. That’s a clear sign for us that we have positioned ourselves just right when it comes to our product and China strategies.

 

Thank you for the interview!

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