Audi in China

            
 
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Case Details:

Case Code : BSTR431
Case Length : 16 Pages
Period : 1988-2012
Pub Date : 2013
Teaching Note :Not Available
Organization : Audi, Volkswagen
Industry : Automobile
Countries : China

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts

Audi in China

In 1986, Audi contacted FAW for the conduct of a feasibility study on the development of automobile related technologies. For the next two years, several technical development projects were carried out and in 1988, Audi and FAW entered into a contract for technology transfer for production and planning of the Audi 100 and setting up of after sales support. Around 500 workers from China were trained at Audi's facilities in Germany and around 30 employees were posted at FAW's plant in Changchun. In 1988, about 499 units of the Audi 100 model were rolled out from the plant...

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Audi's Strategies in China

According to McKinsey's Report on China's premium car market, China was the second largest luxury car market next to the US. During 2012, the Chinese purchased 1.25 million premium cars and the average price of the each car was US$ 32,144. The report also found that the Chinese with an average annual income of US$ 16,074 were keen on purchasing a basic luxury car. Based on the growth statistics, McKinsey expected China's luxury automobile market to reach 2.25 million units by 2016 and 3 million units by 2020. It also reported that China might surpass the US as the world's largest consumer of luxury cars by 2016.

McKinsey's survey also reported that 80 percent of China premium luxury car segment was dominated by German manufactures BMW , Audi, and Mercedes Benz . Of the trio, Audi was the top player. In 2012, Audi's market share in the premium car segment in China was 29.6 percent followed by BMW (23.6 percent) and Mercedes Benz (20.6 percent).

In the J.D. Power China Sales Satisfaction Index survey, Audi was rated high on parameters like customer satisfaction in 2012. It also continued with its lead in “China's auto sales satisfaction” and “China's auto customers' satisfaction” surveys. Audi's customers were highly impressed with the sales support, customer care, after-sales service, and delivery process at Audi's dealers...

Looking Ahead

In a survey conducted by J D Power, China, Audi had recorded the highest levels of customer satisfaction. The survey reported that Audi had delighted its customers in the areas of sales dialogue, customer care, after-sales service, and the delivery process.

To continue its successful run in China, and maintain its position and brand image, Audi came up with a blueprint — ‘Leadership Strategy' for 2020. The strategy aimed at making Audi the most appealing brand in the country. Audi planned to increase annual production in China to 700,000 units by 2015. By then, it planned to have 42 variants. It also estimated that by then, the market for luxury cars in the country would reach 2.38 million units...

Exhibits

Exhibit I: Premium Automobiles in China
Exhibit II: Audi China Dealership Units


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