【Zhongyang Car Review】Audi's "stall" reflects the difficulties of transformation

The sales gap between the top three German luxury companies in China has further widened. On January 12, BMW released its global sales figures for 2021, of which 846,000 units were delivered in China, an increase of 8.9% year-on-year. Previously, Mercedes-Benz announced that the delivery volume in China was 759,000 units, down 2% year-on-year. Audi delivered 701,000 units, down 3.6 percent year-on-year. This means that Audi is "at the bottom" in the third year of the top three competition.

From holding the champion in Luxury car sales for more than 30 years, falling to the "bottom", Audi's "stall" inevitably caused discussion, and various versions flew all over the sky. Some people say that this is caused by an unreasonable share ratio. As a tripartite shareholder of the FAW-Volkswagen Audi project, Audi, Volkswagen and FAW Group hold 10%, 30% and 60% of the shares respectively under the joint venture agreement. In the early stage of the joint venture, due to the small production and sales volume, the three parties did not feel the profit gap obviously. However, with the rapid expansion of China's luxury car market in recent years, especially after FAW-Volkswagen Audi annual sales of 500,000 units, the sharp increase in profits has made Audi, which has contributed the most, feel more and more "at a loss". The result is that Audi "married" SAIC Volkswagen and established SAIC Audi with equal shares. The secret struggle with the FAW Group has unsurprisingly affected Audi's development in China.

There is some truth to this analysis, but it is not comprehensive. Audi has been surpassed by competitors in China, and I am afraid that it is also related to its brand power and product strength. There is an international consensus that the Audi brand is not as "tall" as Mercedes-Benz and BMW. This is not hard to prove by the annual global luxury car sales data. In fact, the annual global luxury car sales champion and runner-up battle is basically between Mercedes-Benz and BMW, and Audi is even difficult to reach the sales threshold of 2 million vehicles.

Some people may ask, why has Audi led sales in China for more than 30 years? The reason is the first-mover advantage. Since entering the Chinese market in 1988, Audi has ranked first in luxury car sales by virtue of its "official car" image and monopoly position, not how strong the brand and products are. With the disappearance of the "official car" dividend, coupled with the decline in its own product strength, as well as the accelerated localization of BMW and Mercedes-Benz, today Audi's first-mover advantage in the Chinese market has disappeared. As a result, Audi has also been looking for transformation.

The problem is that transformation doesn't succeed with a few slogans. For example, Audi has shouted the slogan of "de-official car" since 2013 to achieve a youthful brand positioning and strategic change, but to this day, its products are still difficult to get rid of the deep-rooted "official car" image. In the eyes of most consumers, it is also an administrative commercial vehicle. So much so that some netizens joked, "I am too young, if I drive an Audi, I am afraid I will be considered a driver." It can be said that how to make the brand younger, Audi has not yet found a clear answer.

Audi's "stall" is also reflected in the slow replacement of products. Under the dual impetus of technology and the market, the best way to maintain the competitiveness of products and enterprises is to constantly innovate and maintain the attractiveness of products to the market. However, Audi's product updates always seem to be a beat slower than its competitors. Whether it is A6L, A4L, or Q5, Q3, it is considered by the industry to be the slowest update speed in the high-end brand camp. In a "like the new and tired of the old" car market, the competitiveness of slow replacement models will be reduced, and they have to rely on sharp price cuts to survive. And "price for volume" is also a double-edged sword, which in turn will hurt its own brand image. In addition, Audi's recall of up to 433,000 vehicles in China last year has left consumers with doubts about the quality of its products. You know, this does not involve the previously criticized "Audi Q5 car odor" problem.

In the face of a new round of technological revolution and industrial change, Audi is also transforming to electrification, but the effect is far less than expected. Following the launch of a number of pure electric models such as the Audi e-tron and the Audi Q2L e-tron, Audi also released two domestic pure electric models based on the MEB platform (a modular system developed by Volkswagen for manufacturing electric vehicles) in China last year - audi Q4 e-tron and Audi Q5 e-tron. From the perspective of market performance, Audi's listed electric vehicles have little presence in the eyes of consumers. So few sales that can be counted with the fingers, let alone competing with Tesla, is also stretched compared with the new car-making force "Wei Xiaoli". How can such an Audi "break through technology and enlighten the future"? (Source of this article: Economic Daily Author: Yang Zhongyang)