Audi expands its product range in China aggressively in order to take advantage of the increasing demand for compact luxury automobiles and crossovers from among the newly rich young Chinese. Even with the sluggish industry sales in the country as well as the tough price rivalry in the luxury segment, Audi's worldwide sales boss Peter Schwarzenbauer insists that he is sticking with his plant to increase production capacity in China by 100% to 700,000 vehicles by 2015.
He also intends to widen the automaker's dealer network from 237 stores last year to 300 by the end of 2012 and to 400 in 2013. Around half of these new stores will be in Tier 1 cities along the coast while the other stores will be in newly prosperous inland cities.
Schwarzenbauer notes that in China, there are 300 cities with at least a million residents while the automaker is present in only 187 cities. By 2015, Schwarzenbauer anticipates that China will outperform the United States as the biggest luxury market in the world. Audi is China's biggest luxury brand and is backed by its long-wheelbase A4 and A6 models. However, the automaker's product mix is beginning to change recently considering that the compact automobiles are becoming a hot growth segment in the luxury market of China.
In order to take advantage of the trend, Audi is constructing an assembly facility in Foshan that will manufacture the A3 model. The factory will be open in 2013. Schwarzenbauer believes that the compact segment will be "extremely big." He added that the segment will generally comprise younger buyers as well as well-paid employees and entrepreneurs. The luxury market in China is starting to be more like Europe and North America, he added. Moreover, Audi is changing its marketing message in China to performance since there are more Audi owners who drive their own automobiles to work. Around 70% of Audi owners drive their cars, while 30% are chauffeured.