Audi Targets Expansion in Smaller Chinese Cities to Drive Growth

Photographer: Tomohiro Ohsumi/Bloomberg

A man walks past Audi AG vehicles displayed at a dealership in Shanghai, China. Close

A man walks past Audi AG vehicles displayed at a dealership in Shanghai, China.

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Photographer: Tomohiro Ohsumi/Bloomberg

A man walks past Audi AG vehicles displayed at a dealership in Shanghai, China.

Audi AG (NSU), the world’s second-largest maker of luxury cars, forecast sales in China will increase by about 11 percent this year, driven by rising incomes and expansion into smaller cities in the country.

Deliveries should reach 450,000 units this year in China, Chief Executive Officer Rupert Stadler told reporters in the southern Chinese city of Foshan, where the automaker is building its second factory in the country. Audi sold 405,838 vehicles last year, a 30 percent increase from the year earlier, according to company data.

Audi’s expansion in China, where it leads in premium car deliveries, is crucial to helping parent Volkswagen AG (VOW) achieve its goal of overtaking General Motors Co. (GM) and Toyota Motor Corp. (7203) to become the world’s biggest automaker by 2018. China remains the German brand’s largest single market, with first-half sales surging 18 percent to 228,139 deliveries.

“A lot of entrepreneurs are coming into the market, the purchasing power is increasing, people are getting a little bit more rich,” Stadler said late yesterday.

Audi has been “very strong” in north China and in Shanghai and Beijing, though it has missed many opportunities in the south, where it will focus a big part of its expansion by opening dealerships in cities with populations of one million to two million people, Stadler said. The automaker will target the country’s western region in its next phase of expansion, he said.

With the new Foshan plant and added capacity in its existing factory in Changchun, Audi will be able to produce as many as 700,000 vehicles in China annually in three to four years, Stadler said. The automaker has started working with FAW to develop plug-in hybrid vehicle technology, he said.

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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