25 Years – Full value chain localization has forged Audi’s leading strengths

　　Sohu Auto: In 1988, FAW signed the Contract on Technical Transfer License for Production of Audi Cars at FAW, and started assembling Audi 100. Since then, both parties have cooperated for 25 years. When we now look back to these 25 years, what stages do you think this period has included? What’s the biggest achievement Audi has made in the Chinese market?

　　Boesch: These 25 years can roughly be divided into three stages. The first stage is 1988 to 1999, a stage of attempt and exploration. At this stage, FAW-VW Audi built the premium car manufacturing base, which was the first in China. Meanwhile, FAW-VW Audi gradually fostered a batch of Chinese local part suppliers, and attempted to conduct some local adaptive development;

　　The second stage is 1999 to 2006, a stage when FAW-VW Audi localized the full value chain and entered global synchronization. We started realizing product upgrades at the same pace as the international market, and gradually following the international standards for parts, manufacturing quality, sales channels and service levels;

　　The third stage is from 2006 to now. At this stage, we have carried out the full value chain localization in more areas, and made some achievements in different aspects. For example, as to R&D, FAW-VW Audi has introduced the micro hybrid technology to cars built in China ahead of the rivals; as to production, aluminum part production throughout all procedures is a very important achievement; and as to brand, FAW-VW Audi has done a lot of innovative work in brand building, and attracted many followers in the industry. For instance, we have launched a series of philanthropic events like Audi Cup, Art & Design Award and Green Driving Training Camp. This series of work can fully prove the achievements FAW-VW Audi has made in different aspects after the third stage.

　　These are really 25 years of great success. The achievements we have made in these 25 years can be boiled down to two points: First, we have won the favor from almost two million users. Second, we have built FAW-VW Audi into the number one premium car brand in China. At the same time, its brand image and value of progressiveness, sophistication and sportiness have been widely accepted.

　　Sohu Auto: During the cooperation for 25 years, FAW and Audi must have learned from and adapted to one another. In this process, what do you think Audi has learned from FAW, and vice versa?

　　Boesch: The success FAW-VW Audi has achieved in 25 years depends to a large extent on mutual learning between both parties, and trust between both parties. We have developed, grown and advanced together. At the same time, we have also made continuous adjustments to adapt to constant changes of the Chinese market. I believe, it is mutual trust and sincere cooperation based on trust that have made us attain all these achievements in 25 years.

　　Sohu Auto: FAW-VW Audi created the sales record of 400,000 vehicles for the first time in 2012, and ranked atop in the Chinese luxury car market with a sales figure of 228,000 vehicles in the first half of this year. Audi has maintained a robust growth for years. What're the secrets? Do you think FAW-VW Audi will continue to keep a high growth rate in the second half of this year?

　　Boesch: When speaking of our secrets for sales success, I think we can see it in two dimensions: First, the full value chain localization mode, which is absolutely a very important factor that has contributed to the success FAW-VW Audi has attained in China. Certainly, this is also something other carmakers in the Chinese market envy us very much and hope to learn.

　　Second, we have maintained a good consistency in strategy. For example, our strategic orientation always stress the high quality of growth. How to make this happen? First, we have kept broadening our product lines, actively expanded our dealer network, kept enhancing our service and care for customers, and kept introducing new technologies to the Chinese market. A very important point is customer satisfaction. In the past years, we have always ranked in the first place on the J.D.Power ranking of auto consumer satisfaction.

　　In the past years, we have never forgotten quality while FAW-VW Audi has quickly increased the sales figure. Thus, we have always sought a development combining quality and quantity. We have attained a sales success, just because we have maintained a good consistency in strategy, and because we have always adhered to the quality-oriented development strategy. We also did a very good job in the first half of this year, and this momentum will last in the second half of this year. In future, we will still succeed as usual.

　　Sohu Auto: Judging from the sales data on the Chinese luxury car market in the first half of this year, BMW, the second place, posted a sales figure of 180,000 vehicles. BMW now still lags behind Audi, but has kept closing the gap. Particularly in the C-Class sedan segment, where Audi has the biggest advantages, the sales gap between Audi A6L and BMW 5 Series was only 800 units in May and 1,200 units in June. As the old rival is chasing, do you believe FAW-VW Audi will continuously seize the crown as the champion in the Chinese luxury car market?

　　Boesch: The Audi brand has observed a very clear and consistent strategy when developing the business in China, and we have always adhered to this strategy. This is why FAW-VW Audi has always consolidated its leading position in the changeable premium car market.

　　By market performance, Audi A6L has kept a stable sales figure after it created a monthly sales record of 12,000 vehicles in September, 2012, and in 2012, the model realized a sales figure of 130,000 vehicles. In January this year, Audi A6L created a new sales record of 13,000 vehicles, and stably ranked in the first place of its segment. By product competitiveness, the all-new Audi A6L is better than its rivals in design concept, hi-tech equipment, efficient power, manufacturing workmanship and other aspects; by product equipment, the all-new Audi A6L boasts the standard equipment the rivals don’t provide, such as engine start/stop, MMI handwriting touch control panel, LED daytime lights and aluminum body parts.

　　In the premium C-Class sedan segment, the rivals often cut down prices to stimulate sales and obtain a short-term sales increase. In contrast, FAW-VW Audi has always persisted in a stable price system and sustainable development, and never sought to enhance sales at the cost of brand image, user interest and dealer’s profit.

　　In China, the Audi brand has always been the champion by overall sales volume, and played a dominant role in different segments. For many years, the Chinese car market is getting increasingly mature, and FAW-VW Audi has also changed the focus of its development strategy to the younger market, diversification and segmentation. This constitutes a stark contrast with the rivals that seek to make a breakthrough in single models. At present, FAW-VW Audi is focusing on the B-Class sedans represented by Audi A4L and SUV models represented by Q3 and Q5, and adjusting the product structure and capacity. We can also see this change from our sales data. For example, the monthly average sales figure of Audi A4L jumped from over 4,000 vehicles in 2010 to more than 9,600 vehicles in the first half of this year, and the sales figure of Audi Q5 also rose from over 3,000 vehicles to more than 8,100 vehicles.

　　Thus, slight changes taking place to a concrete segment does not suffice to prove Audi’s competitive strengths in the segment have fallen down. On the contrary, I believe, and I am very confident that, FAW-VW Audi will continue to maintain its leading strengths in China’s premium car market.