On November 8th, Audi's global headquarters in Ingolstadt did not deny that it was in contact with SAIC Group to establish a joint venture company in an email replying to the NBD vehicle (micro-signal: NBD-AUTO). "We don't comment on the speculation about SAIC," Audi AG wrote in an e-mail.

NBD Motors further learned that the process of establishing a second joint venture company with Audi in China promoted by the SAIC Group is accelerating. On the one hand, the introduction of luxury brands under the Volkswagen Group is the direction of SAIC Motor Corporation's efforts. On the other hand, Audi's growth slowdown in the Chinese market in the past two years and a series of problems in FAW-Volkswagen's shareholding adjustment have made FAW a one-time leader. The cooperation between the Group and Audi is no longer as impregnable as before.

However, SAIC Audi has not been as smooth as the current exposure. "Audi will not easily decide to establish a new joint venture in the Chinese market." A person close to Audi said to the NBD that the current accurate progress is the feasibility study between the two parties. This is similar to Audi's planned acquisition of Alfa Romeo, which was abandoned after meeting with Audi's Board Chairman Stead and Fiat CEO Malhoney.

“The promotion of a new project requires a full-scale assessment and it also takes time.” The above-mentioned persons close to Audi stated to NBD that under the background of the long-standing and unsuccessful discussions by FAW Audi Sales Company, “SAIC Audi Joint Venture Company "There are still a lot of variables. It is also considered that Audi is increasing its "chips."

Audi no longer stands out

Audi's dissatisfaction with the performance of the current Chinese market has been very obvious, and it is also the "fuse" of SAIC Audi. Audi took the lead in China's luxury car market in 2015. In particular, Audi has faced internal and external risks when other competitors accelerate the layout.

According to Audi's previous global layout, after the Chinese market entered a period of steady growth, Audi will focus on the North American market. However, due to a series of incidents such as “discharge gates”, Audi cannot turn back and tap the growth potential of the Chinese market again.

On the one hand, in terms of sales volume, the “red line” that accounts for one-third of the world’s sales volume has been broken. According to the data, in the first three quarters of this year, Audi sold a total of 440,200 vehicles in China, an increase of 6.5% year-on-year, accounting for 31.25% of global sales. NBD car statistics found that Audi's market share is not the same as before.

On the other hand, NBD cars learned that because the A-class cars represented by the A3 family dominate sales, their profit margins are much lower than those of C-class cars. At the same time, the dominant models represented by the A6L rely on price advantages to ensure market share. This has led to a significant drop in profit contribution from the Chinese market.

The above two aspects are unexpected at Audi's global level. At the same time, for FAW-Volkswagen’s asset assessment, the shareholders have not been able to reunite, the decision-making has slowed down due to the change of FAW management, and the public “emission gate” has caused a delay in equity changes. Under the combined effect of many factors, Audi cannot be further marketed in the Chinese market. Multi-profit and discourse power.

Therefore, Audi's joint venture with SAIC Motors to establish a second company is also facing layers of challenges. According to the plan, SAIC plans to establish a new company with Audi and is currently being executed by the SAIC-Volkswagen team. However, NBD Automobile understands that, unlike the Skoda model, the SAIC Audi joint venture plans to be independent of SAIC Volkswagen.

SAIC Audi's non-short-term optimal solution

Even if the Audi models were produced under the “OEM” and the sales model of SAIC Audi New Company was launched first, Audi’s new structure in the Chinese market still faces numerous risks.

First of all, at the level of product distribution, Audi differs from Volkswagen in that its models cannot support the distribution of two joint ventures. In particular, at the moment, the introduction of Audi's new car at FAW-VW's Foshan plant and the introduction of the new Q5 have all been completed, and the cost of redistributing products is very high.

Second, Skoda mode is not suitable for Audi at the level of joint ventures. Skoda is under the "aura" of the public in the Chinese market, and brand building has never been separated from the public. Under such circumstances, after the Skoda brand reaches sales ceiling, continuous growth also faces challenges.

It is worth noting that after the Porsche project was "grounded", the SAIC Group's competition for the luxury brands under the public did not stop. Audi's plight in the Chinese market has made the Volkswagen Group and SAIC Motor Group see new opportunities to come together. However, in this incident, the core role of Audi has not stated its position.

NBD Motors learned that Stead's team is currently "extinguishing" the US market. At this time, as the largest single market in the world, the most important thing in the Chinese market is "stability." However, the series of problems faced by the establishment of the second sales company can easily cause fluctuations in the most stable Chinese market, which is also an unacceptable situation for the Audi Board of Directors.

According to the analysis, solving the sustainable growth and profit recovery of the Audi brand under the current system is currently the most realistic problem for Audi. The reform of the relevant system has been unavoidable. Prior to that, the solution of FAW Audi sales company may be more urgent.

Reasons for cooperation

In terms of sales performance, China's market accounted for one-third of the world's "red line" has already broken profit performance, and profit performance in the Chinese market declined more significantly.

Cooperation risk

◇ At the product distribution level, it is difficult to support the two joint venture companies to distribute the joint venture model level. Skoda’s joint venture model is not entirely suitable for Audi.


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