German car manufacturer Audi formally released its new top-range A8 sedan for the Chinese market in Beijing on Sunday, sparking heated competition in China's imported luxury car market dominated by Mercedes-Benz and BMW.
The move coincided with the opening of Audi's first exhibition center in Asia, just two kilometers from Tian'anmen Square.
Andreas Deges, executive director of Audi China under the VW (China) Investment Co., Ltd., said the introduction of A8 was a strategic move to strengthen its brand position in the Chinese market. A strong position would help promote sales and market share of the locally made A6 and A4 cars.
As traditional car markets remained lackluster due to a slowdown in global economic recovery, the Chinese economy steamed ahead with annual automobile sales exceeded 3 million, growing by 40 percent a year.
Jia Xinguang, chief analyst with the China Auto Industry Development Consultation Company, said as the Chinese market grew more diverse, stronger brand positioning was an effective way for international firms to improve market penetration and remain competitive in China.
Audi has already invested in local production of A6 and A4 in China. The introduction of A8 will give the company a full-range position with products for both medium and upper end customers.
Deges said the Chinese market was maturing as market division became increasingly clearer. In order to strengthen its position in the increasingly globalized market, Audi had to introduce a full-range line of products into China.
In a highly symbolic launch ceremony on Sunday, Audi displayed 13 cars of different models along the central avenue of Beijing.
Other major international car makers such as Volkswagen, General Motors and Toyota also announced at different occasions earlier this year that they would bring a full range of products to local production in China. After Audi and BMW set up manufacturing bases in China, Daimler-Chrysler announced plans to build a factory in the country.
Deges predicted there would be greater competition in China's luxury car market as more international companies came with top-range products.
As a matter of fact, the newly released Mercedes-Benz S600 models and BMW 760 series had already entered the market this year.
As sales of luxury cars slowed in the United States and Europe, demand in China was rising. China accounts for about 20 percent of the luxury models sold around the globe. According to Audi, China is expected to become the second largest buyer of Audi cars in the next two years, after the United States.
Deges said the newly prosperous social group in China wanted to demonstrate their success, offering an enormous potential market for luxury cars.
Seven out of every ten Audi cars sold in China were bought by the private sector, he said, adding that the ratio would rise to 80 percent in two years. The initial feedback on Audi A8 indicated that the sales of the luxury car would more than double in the next 18 months.
The fast expansion of the luxury car market in China also helped improve product quality and service in the market as a whole. In order to improve brand images in China, international car makers are investing heavily in the development of service networks.
Deges said the Chinese market was one of the most complicated in the world. As the Chinese people's standards of living improved, they became more selective in purchasing cars. The long-term growth of the company depended on the quality and convenience of service that it offered to Chinese customers, as it did in other countries.
"If the market conditions allow, we will not rule out the possibility of manufacturing A8 cars in China," he said.
(Xihua News Agency July 14, 2003)
