Growth
New concepts for new buyers

The Volkswagen Group is aiming to deliver more than 10 million vehicles per year worldwide from 2018. One central driver of this growth is the Chinese market, where for years Audi has been setting standards in the premium segment with its products and technologies. Now the brand is appealing to new target groups and customers with a digital showroom and a selection of used cars.

Prestige matters in China.

At the dealerships run by Patrick Chou, it is increasingly image that tips the balance when a customer is faced with the choice: will it be a new mid-size car or a used premium model? The market for used cars in China is still in its infancy. In 2013, for every new car sold, 0.35 used cars found new owners – compared with 2.4 in Germany. Having said that, with sales hitting between an estimated 6 and 6.5 million vehicles (2013), the Chinese market is already, in the space of just a few years, matching the volumes of large European countries (Germany 2013: 7.1 million). And the share of premium models in that number rose sharply to 8.8% in 2013.
“Buying a used car is all about trust, and that has to be built up”, says Chou, CEO of authorized Audi dealer group Better Life. Audi is making every effort to respond to this challenge in China. For example, the Audi stands at motor shows feature special used car terminals. Prospective customers are offered financing arrangements and an extensive range of services and warranty packages.With 291 authorized dealers, of which 60 are exclusive Audi centers, Audi has the largest dealer network for used cars, with almost 27,000 vehicles (+55%) sold in 2013. More than half of these belonged to the key “young used cars” segment (less than five years old) as part of the brand’s own “Audi refined recommendation User Car” program (+72% year on year).
This is another example of the influential role played by Audi in the Chinese car market. The premium manufacturer has been building cars in Changchun, northern China since 1988 – first under license, then in a joint venture with Volkswagen and local partner First Automotive Works (FAW). And since April 2013 the Audi Q3 has been rolling off the assembly line there alongside the Audi Q5 and special long-wheelbase versions of the Audi A4 and Audi A6 models. All four models are market leaders in their respective segments. Sales have kept pace with the rapid growth of the Chinese economy in general. By 2010, Audi had sold 1 million vehicles in China and Hong Kong, with the 2-million milestone coming up just three years later. With 491,989 units sold (+21%), the brand celebrated a record-breaking year in 2013.
That makes Audi by far the largest premium carmaker in China. And by the same token, China is the most important market of the future for Audi – and the Volkswagen Group as a whole. Indeed, in 2013 and 2014 the Group is opening seven new factories in China as part of its bid to become the world’s largest automaker by 2018. As a result, annual production is expected to rise from 3.27 million vehicles at present to over four million.

The breathtaking pace of expansion

of the Chinese car market has slowed. The years of up to 46% growth (2009) have been followed by more moderate gains, most recently of 19%. State help-to-buy initiatives and high inventories have expired, and registration restrictions are now in effect. Beijing and five other cities have placed additional limits on private car registrations, and other smog-plagued cities are keen to follow suit. However, experts continue to rate the prospects for sales as very healthy. In 2013, China recorded some 16 million new registrations, making it the world’s second-largest market, just behind the USA.
The engine for this continuing growth is the newly moneyed middle class. Accordingly, nine out of ten Audi buyers in China are private customers. On average they are in their mid-thirties, well educated and often female, and most have a family. For roughly one third, an Audi is their first car. “Many people see compact premium cars as entry-level models”, explains Rene Koneberg, Head of Audi China Brand Marketing. In this segment Audi builds not one but two model series in China: along with the Audi Q3 in Changchun, since early 2014 the Audi A3 has been built at the new FAW-Volkswagen plant in Foshan, southern China. Together, the two plants will drive up annual production to 700,000 units over the medium term.
“Buying a used car is all about trust, and that has to be built up.Patrick Chou, CEO of authorized Audi dealer group Better Life in Beijing

And they will do so the green way.

Foshan is one of the most environment-friendly car factories in China. And it’s not just the factories, because the Volkswagen Group’s € 9.8 billion investment drive also includes a focus on building highly efficient products. An efficiency program launched in 2011 has seen the average fuel consumption of locally built Audi models drop by one fifth. Contributory factors here have included the integration of start-stop technology, brake energy recovery and lightweight components. In the future-focused electric mobility market, meanwhile, the premium manufacturer is looking to introduce e-tron technology soon, and already offers three full-hybrid models. Moreover, Audi is to build an engine that complies with the Euro 6 standard on site in China, thereby bringing future EU standards to the country. As a result, the fuel consumption limits announced by the Chinese government – an average 5 l/100 km by 2020 – are no problem for Audi. The brand won several awards in China in 2013 for its environment friendliness and levels of customer satisfaction.
The brand’s customer-centric approach can be experienced in the fresh new surroundings of Audi City, which opened in Beijing in early 2013. Intuitively controlled powerwalls allow around 8,000 visitors per week to configure a full-size version of their personal dream car – from the inside, from the outside and using many color and equipment options. In the digital showroom on the first floor, visitors with a strong interest in purchasing a car can experience the haptic qualities of 15 display models, compare leather samples and wheel rims, and receive personal consultation.
Beijing is the second city (after London) in which Audi has used the Audi City concept to appeal to younger target groups in particular. “In China, where in the past customers have tended to buy their cars off the shelf, we are moving customer behavior to a higher level of individualization,” says marketing manager Koneberg. And that will be another growth driver in this expanding market.

1 – The new Audi showroom opened in Beijing at the beginning of 2013. 2 – Patrick Chou, CEO of authorized Audi dealer group Better Life in Beijing. 3 – Visitors engage in the digital configuration of their personal dream car.