The Audi Q5 SUV is built in China, along with the A6 and A4 sedans. A phalanx of other models are imported. Photos Provided to China Daily

As rivals gain ground, the luxury leader maps out plan for next million

INGOLSTADT, Germany - Rupert Stadler, chairman of Audi AG, finished his recent speech at the carmaker's annual press conference by quoting Victor Hugo.

"The future has many names: For the weak, it means the unattainable. For the fearful, it means the unknown. For the courageous, it means opportunity."

"It is this opportunity that motivates us at Audi," the 48-year-old chairman said.

Much of Stadler's courage and Audi's opportunity will come from China, the premium carmaker's second-biggest market in the world last year - and expected to become No 1 this year.

The largest premium car provider in China for two decades registered a 43.3 percent sales surge to 227,938 cars in 2010 - just 1,219 fewer than Germany and more than double its delivery in the US.

'Rapid pace'

"We expect that the Chinese car market will continue to grow at a rapid pace in the medium term. And we again intend to participate in that growth in 2011," he said.

"We are currently expanding the Changchun plant (in Northeast China)," Stadler said. "We are building up expertise in various areas including sales specialists and development and electronics experts. That gives the site a boost and acknowledges its importance."

Stadler reaffirmed Audi's ambitious goal of moving a million cars in China from 2011 to 2013.

He said the company's sales in the country will reach 250,000 to 280,000 units this year, which will help Audi attain its target of selling more than 1.2 million cars globally, up from 1.09 million in 2010.

Audi now has an annual production capacity of 200,000 units in China at its joint venture with its parent Volkswagen Group and local partner FAW Group.

He said production capacity has reached its maximum level and Audi is preparing to raise it to as much as 400,000 units a year to achieve the million sales target.

Yet Audi is now more closely trailed in China by archrivals Mercedes-Benz and BMW, both of which are rapidly expanding.

BMW and Mercedes-Benz sold 168,998 and 148,400 cars respectively in the country last year.

BMW has announced plans to increase its annual local production capacity to 300,000 units, while Mercedes-Benz will also raise its capacity to 300,000 units in 2015.

'Maintain our leadership'

To meet the challenges, Stadler said "Audi would further adjust (raise) the million-unit sales target if the plan failed to maintain our leadership."

The nation's premium car segment still has huge growth potential in the world's second-largest economy, he said.

He predicted that the segment would account for 10 to 12 percent of the entire passenger car market in China in the next five to 10 years, up from 5 to 6 percent last year.

Audi now builds the A6 and A4 sedans as well as the Q5 SUV in China.

It also imports a phalanx of other models including the newly launched A8L limousine, the Q7 SUV and the TT, A3 and R8.

It plans to introduce the A7 and A1 as imports this year. Stadler said the Audi A6 Hybrid will be launched in China in 2012.

He noted the company now has a team in China developing auto electronics and 3G navigation systems for the local market and other countries in Asia including Japan and South Korea.

In the past fiscal year, Audi's global sales revenue increased by 18.8 percent to 35.4 billion euros ($49.6 billion) and its operating profit more than doubled to 3.34 billion euros ($4.68 billion).

China Daily

Rupert Stadler, chairman of Audi AG.