The secret of Audi

Mr. Sun Muzi, vice general executive of auto market research and service of New Huaxin Group

Audi succeeded in China high-grade auto market not only for market publicity and the cherish opportunity of being official vehicles but also the strategy of catering local people and model innovations, as well as its perfect service, which also explains the cases of other successful high-grade auto makers.

Audi sold 833,000 units globally from January to November in 2006 up to 8.7% compared with 766,629 units of same period in 2005 (766,629 units, from January to November in 2005). According to the lasted sales figure released by Audi Cops, China market excluding HK is the fastest growing market. From January to November, Audi sold 73,415 vehicles, with an increase of 53.6% compared with previous year. As to November, 7,465 vehicles were delivered to customers, up to 11.4%. It is expected that the sales will be over 80,000 units by 2006. Audi has been the first place in China High-grade vehicle market for 8 straight years since Audi A6 launched in 1999.

In the past 8 years, Audi grew rapidly as well as suffered the decline of market share. But the leading status in high-grade vehicle market does not change at all and there is no sign of declining its seemingly monopolistic status, which hints that Audi’s success in China is inevitable.

The earliest market seeker
It can be dated back 20 years since Audi entered Chinese market. In 1986, Audi joined hands with China First Automobile Works to study the feasibility of technology cooperation. In the following two years, two sides worked consistently about the technology cooperation. In 1988, Audi authorized the partner to produce automobiles and in that year 499 units were made. In the earlier 90s, China First Automobile Works introduced Audi 100 line to produce CKD with a daily capacity of 50 units. In 1993, Audi joined FAW-VW Corps. In 1995, FAW-VW embarked on developing 200V6 exclusively for Chinese market, which became the highest grade model before Audi A6.

In 1999, A6, just appeared in Geneva Show 2 year ago, was put into China market and off the line in September and sold 6911 units that year. It filled the blank that China could not make high-grade vehicles.

It is after four years that Audi’s direct rival produced first vehicle in China. After 4 years Audi made a miracle of selling more than 150,000 units totally and more than 60,000 high-grade vehicles in that year. Before BMW, Benz, Cadillac and Crown came into Chinese market, Audi has established over 50 4S stores with globally unified standards across the nation, which set tough barrier for newcomers’ market exploration.

Brand top priority
Audi valued the establishment and spread of brand from the launch of Audi 100 which was first showed at Ingostradt city theatre. It laid the solid foundation for creating an independent brand afterwards.

Audi invested huge money in ads, public relationship and marketing to publicize its brand. In 2005, Audi invested 125 million RMB in ads less than Crown 171 million and BMW 251 million, but Audi’s presence in China for nearly 20 years which is a great advantage over any rivals.

In addition, distinctive and unified features should be identified in ads, promotion activities and marketing for any auto brand. For example, BMW enjoying driving, VOLVO focusing safety and Audi displaying technologies. The persistent efforts on unique belief built up their brand advantages in auto market. Until now, Audi is still persisting in the belief as its slogan “breaking technology and enlightening future” claiming. So communicating distinct belief and standing out with characteristics are crucial in highly-intensive market competition.

Restructure
As the development of China auto industry, private car is taking increasing share of demand instead of commercial vehicle. Taking 2005 as example, over 70% were purchased by private, which verified this change. How to attract potential customers is decisive for the future status of Audi in high-grade vehicle market. So the first and crucial step is to cater special needs for private customers.

First factor is characteristically equipped. From 2001, Audi equipped xenon lamp, independent heating system, electric seats and Multitronic auto/manual transmission case etc on A6. Afterwards, Audi A6 with 23 advanced technologies and in more color coats appeared. The customers could choose some individual equipment such as entertainment pack, sports pack, winter pack and leather pack and so on. Moreover, Audi launched its individual production and marketing mode, customers can order an individually-equipped vehicle rather than buy from finished vehicles completely designed by manufacture. This move keeps Audi leading status in high-grade vehicle market.

Second factor is localization. Individualization only meets the customers in low level, which is easily learned and copied by rivals. In 2004 and 2005, BMW, Benz and Crown challenged Audi fiercely with their brands and services of providing individual demands. The questionnaire of Audi shows that Chinese customers pay more attention to comfortability such as the space of back seats and related equipments as for C class vehicles. In April of 2005, new A6L was put into market, in which “L” means 100mm longer than the ones made in Germany. This change is also to meet Chinese special demand perfectly.

Last factor is serialization. Audi began its serialization from A4 in 2003. The production of A4 expanded the capacity and also strengthened the ability against rivals. After 3 years, A4 came into the second place just under A6. According to statistics, the average monthly sale of A4 is over 1,000, which makes A4 leading diversified market of B-class vehicles.

In January of 2006, sale department of FAW-VW was established in Changchun, which makes Chinese customers can buy A4 and A6 made in China as well as imported vehicles such as A8, Q7 etc. So Audi finished its presence in China’s high-grade vehicles with a series of products after three remolds to face full-scale and highly-intensive competition.

Perfect service
It is too important to emphasize service for high-grade vehicle market.

SSI(Sales Satisfaction Index) and CSI(Catering Satisfaction Index) developed by J.D.Power are becoming the service yardstick of automakers, Audi captures the top place of table for 3 straight years with perfect services in delivery, sales etc processes, as well as its stable performance in CSI. Historically, Audi has been on the top 3 places ever since 2002.

It is expected that the following 3 years are crucial for China auto industry and by 2010 the general capacity of whole vehicle will reach 6.60 million, in which that of high-grade vehicle will be over 200,000. How to capture more market share and develop in such fast-growing and promising market is concerned by all carmakers including Audi. Of course, the history Audi in China is a good example and enlightens  rivals.