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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About Audi

The history of Audi dates back to November 1899, when August Horch (Horch) established A Horch & Cie. Motorwagen Werke (Horch & Cie) in Cologne, Germany. The company released its first car in 1901. Later in 1909, Horch left the company after differences cropped up between the Board of Management and the Supervisory Board. He established a car company called Audi at Zwickau, Germany, on July 16, 1909. The company began its operations as Audi Automobilwerke GmbH from April 25, 1910. In late 1914, it became a listed company. In 1928, the Audi brand was bought by J S Rasmussen, who acquired a majority shareholding in the company.

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In 1929, the Western economies experienced an economic downturn as a result of a stock market collapse. The economic crisis, which came to be known as the Great Depression , lasted from 1929 to 1939. To withstand the recession, Audi, with backing from the State Bank of Saxony, merged with three other automobile companies, Horch & Cie, DKW , and Wanderer in 1932 and formed the Auto Union AG (Auto Union). A new logo with four interlocking rings was designed to represent the inseparable unity among the merged companies. Auto Union AG was headquartered in Chemnitz, Germany, and it became the second largest motor vehicle manufacturer in Germany. Even after the merger, the individual identity of the merged companies was maintained. Each company was assigned a different market segment — DKM dealt in motorcycles and small cars, Wanderer in midsize cars, Audi in deluxe midsize cars, and Horch & Cie in luxury cars.

By 1934, one in every four cars registered in Germany was supplied by the Auto Union. In 1939, production was halted due to the World War II. The group was ordered to manufacture armaments instead of civilian vehicles. By the end of 1940, the production of Audi cars had stopped completely. In 1945, the War came to an end and all the units of Auto Union AG came under East Germany, which was controlled by the Soviet Union. The plants were completely dismantled by the Soviet forces. In late 1945, a depot for Auto Union parts was established in Ingolstadt, West Germany.

By September 1949, operations were started at Ingolstadt and the company was renamed as Auto Union GmbH. The logo remained the same. From then on, the company began producing vehicles again. In 1959, Daimler-Benz AG acquired Auto Union GmbH. In 1965, Daimler-Benz sold Auto Union GmbH to another German automobile company, Volkswagen AG (Volkswagen). In 1968, under the supervision of Ludwig Kraus, the then Head of Development and member of the Board of Management, the Audi 100 model was designed. This turned out to be a huge success...

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