Audi may suffer as China puts the limit on government fleet

Article by Christian Andrei, on May 25, 2011

China intends to limit the allocated number of vehicles allowed to central government officials as public agencies aim to reduce spending, the 21st Century Business Herald newspaper reported.

Specifically, the Communist Party and the central government agencies will be allowed to have one car for every 20 employees, the newspaper disclosed based on an official statement that has not been released to the public.

According to the report, the new policy will also reduce the maximum allowable cost of official cars to 180,000 yuan (19,572 euros) from 250,000 yuan, as well as the allowed maximum engine size to 1.8 liters from the current 2.0 liters.

The local government agencies will cap their fleets based on the standards that are set by provincial authorities, the paper stated.

This policy comes as Premier Wen Jiabao takes actions to diminish power abuse by officials amid the country’s growing wealth gap. On another note, the policy will undermine the sales prospects for Volkswagen AG’s Audi, which is the dominant brand of the official fleet.

Audi has previously recorded first-quarter sales in China to 64,122 vehicles, a 25 percent increase from the same period last year.

Last month, Audi China chief Dietmar Voggenreiter disclosed that the company aims to more than double its local dealerships by the end of 2013 to 400. The information office of China’s State Council as well as Liang Liang, a spokeswoman for Audi in Beijing, has yet to comment on the matter.

Topics: audi, china

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