Premium carmaker continues to be a trailblazer with innovations across 'whole value chain'

In Chinese culture, the age 30 has a special meaning. It's the point at which one is believed to have established himself or herself, and after which one is expected to grow in wisdom and vision; in the words of Confucius in The Analects: "At age 30 I stood firm".

That happens to be true of German carmaker Audi, which celebrated the 30th anniversary last week of its cooperation with China FAW Corporation Ltd, which dates back to the decision in 1988 to assemble the Audi 100 sedan in Changchun, Jilin province.

Audi became a shareholder of the joint venture FAW-Volkswagen in 1996 and has since produced models in the country through the partnership, one of the most successful carmakers in China.

Audi owners are invited to attend the 30th anniversary ceremony of the German brand's cooperation with FAW. Photos provided to China Daily

Xu Liuping, chairman of FAW, shares his understanding of Audi's success in China over the past 30 years.

Representatives attend the 30th anniversary ceremony of FAW and Audi's cooperation.

As the first premium marquee to localize production, Audi has reigned in the country's premium segment for 30 years in a row: it has delivered 5 million imported and primarily made-in-China vehicles in the country, which is now Audi's largest car market worldwide.

"Beginning with the joint production of the Audi 100 in 1988, FAW and Audi laid the foundation for what was to become one of the strongest and most important partnerships our group has today," said Herbert Diess, CEO of the Volkswagen Group, Audi's parent company, at a celebratory event last week in Changchun.

"All this would not have been possible without the dedication of our outstanding partner FAW. And it would not have been possible without the efforts of the whole Audi team of our joint venture FAW-Volkswagen."

Its success does not stop there. Even more important, the partnership is believed to have blazed a trail and helped to boost the country's then still-primitive automotive industry.

FAW Chairman Xu Liuping said the two partners have made many "firsts" in China, including opening up the sub-segments of China's premium vehicle market, introducing the 4S dealership into the country, and localizing research and development represented by the long-wheelbase A6 sedan.

The moves, especially offering the long-wheelbase vehicles, have proved especially popular and earned Audi a reputation as the foreign brand that best understands the country.

Following its lead, almost all premium carmakers and even volume brands are now extending wheelbases of their models sold in China.

"It was thanks to the cooperation between FAW and Audi that China had started its journey into the premium vehicle segment, and of course, heralded the era of premium vehicle consumption in the country," Xu said.

Liu Yigong, board member and president of FAW-Volkswagen Automotive Co Ltd, explained his understanding of Audi's "establishment" as its turns 30 in China.

"First, the brand has established itself, with its widespread and positive brand awareness in the country, which is the result of FAW and Audi's long and successful partnership," he said.

Liu said they have together built an industry-leading system, covering fields ranging from research and development to manufacturing, purchase and even sales and marketing. "Compared with our competitors in China, to be frank, we are more advanced," he said.

He made a special mention of human resources, saying that in the sales team, many Chinese are veterans who have worked diligently in the sector for more than a decade or even decades, and the Chinese employees in production and R&D have made great progress, as well.

"So the establishment covers the improvements and success in our abilities, which will prove very important in future cooperation," Liu said.

The achievements are primarily the results of FAW and Audi's efforts to promote what they call "localization throughout the value chain".

Liu said China-produced Audi models account for 90 percent of total sales in the country, much higher than other premium carmakers, which is an indication of a higher level of localization.

FAW-Volkswagen has built five state-of-the-art manufacturing bases in the country - in Changchun, Jilin province; Foshan, Guangdong province; Qingdao, Shandong province; Chengdu, Sichuan province; and Tianjin. Two of them - the Changchun and Foshan plants - are producing Audi models.

The 6.4 billion yuan ($922 million) Audi Q plant in Changchun, which is dedicated to producing the Q models, is the most advanced technologically of all Audi plants worldwide, according to Liu.

Audi's local production has helped to foster the development of local suppliers, as well.

"We will continue our job in this aspect, and actually we have now a new idea, called 'whole value chain co-innovation' between us and our partner Audi, in the new age of mobility," Liu said.

First, they will collaborate to build an internationally competitive research and development system.

Among others, FAW-Volkswagen will develop capacities for high-end electric vehicles. It will offer models specially for the Chinese market, and produce vehicles for overseas markets.

With the capacities, the carmaker expects Audi to become a leader in China's premium new energy vehicle segment, with such vehicles accounting for more than 30 percent of its sales in China by 2025.

The A6L e-tron, which is already produced locally, is Audi's first electrified car, and from next year on the e-tron, a purely electric SUV, will be available in China. It, too, will be localized starting in 2020.

FAW-Volkswagen also plans to develop and produce manufacturing equipment, which the carmaker said will facilitate localization of more Audi models and also helps to blaze a trail in this aspect for the Chinese automotive industry.

The partners will also establish a high-end digitalized mobility system. With its products such as Audi on demand+ and myAudi, it hopes to offer a better experience for its customers and turning Audi into a top brand in premium mobility.

"I believe, in the future, the advancement of the cooperation between FAW and Audi will become more confident and creative, which without doubt will lead to unexpected possibilities for customers, our company and our employees," said Rainer Seidl, first vice-president of FAW-Volkswagen.

Diess said Audi's 30 years in China is a success story of continuous innovation, transformation and friendship, and the brand is taking over a leading role to drive new technologies in China.

"We will continue to provide high-quality products which serve the needs of our Chinese customers. To maintain the high speed of development, we will be making available 15 billion euros for new technologies through 2022."

"A 30th anniversary is one of the best jubilees you could have: after 30 years there is enough experience to build upon and, at the same time, one is still young enough to accept new challenges," he said.

lifusheng@chinadaily.com.cn

Timeline

May 1988

FAW and Audi signs deal to produce Audi sedans under license.

August 1989

First China-made Audi 100 sedan rolls off assembly line in Changchun.

February 1991

FAW-Volkswagen Automotive Co Ltd is established.

December 1995

Audi models are listed in FAW-Volkswagen's localized production plan.

May 1996

First Audi 200 sedan rolls off the assembly line at FAW-Volkswagen.

May 1997

Audi cars locally produced in China total 100,000 units.

September 1999

Audi's first long-wheelbase sedan, the A6L, rolls off assembly line at FAW-Volkswagen.

January 2006

FAW-Volkswagen Audi Sales Division established in Changchun, Jilin province.

October 2009

Q5 SUV locally produced at FAW-Volkswagen is launched in China.

October 2010

Audi becomes first premium carmaker to sell 1 million vehicles in China.

July 2013

Audi sales in China since its arrival in 1988 now total 2 million.

May 2015

In less than two years, Audi sells another 1 million vehicles, bringing accumulated China sales to 3 million.

January 2017

FAW and Audi signs 10-year plan for the brand's development in China.

March 2018

FAW signs deals with Audi and Volkswagen to strengthen cooperation, in an effort to better meet demands of Chinese customers.

(China Daily 11/26/2018 page19)