Daimler AG and BMW AG are expected to step up their game in China. Both want to challenge Audi AG's 20-year dominance in the country. As evidence of their interest to gain ground in China's car market, BMW and Daimler's Mercedes-Benz will be launching new models at the Beijing auto show. These cars are developed specifically for Chinese customers.
It would be right for Audi to take this threat seriously. In the past six years, Audi's market share has fallen more than 20 percentage points.
Audi would have to push its efforts further in order to reach its goal of becoming the world's largest luxury carmaker by 2015. Notably, China is Audi's No. 2 market and it is the only country where it dominates by a huge gap.
On the other hand, Mercedes is the fastest-growing luxury carmaker in China. Arndt Ellinghorst, a London-based automotive analyst with Credit Suisse, said that it won't be easy for Audi to hit its target since Mercedes and BMW have more upside than Audi in emerging markets.
Credit Suisse actually has "outperform" ratings on the three carmakers. The BMW and Mercedes brands appeal better to wealthy consumers and their new models are anticipated to increase their sales further, taking some of Audi's market share.