Audi and BMW luxury cars will no longer be purchased by the Chinese Government. As reported by us earlier this week, the Chinese Government have become concerned of the strength of foreign car makers as they are having an impact on the countries local productions.
The power of the Chinese Government
The Chinese Government car budget annually stands at a staggering $8 billion. The Government own 5 million vehicles across the country, which sounds like a lot, but don’t forget China have the most amount of cars anywhere in the world.
Audi are the number one luxury car manufacturer in China. They have performed so well in recent years that China is the number one market place for them. Germany, Audi’s home country now stands at number two. Audi are the fastest growing luxury car manufacturer in the world. Although sales may have been lower, American and Indian car market growth rates were higher than that of BMW and Mercedes-Benz. The Chinese auto market is extremely important to Audi for obvious reasons as the country sells one fifth of Audi cars.
With the Government taking up a large chunk of that percentage, is there any way that Audi are able to recover from these great losses? According to Volkswagen, the owner of Audi this will not prove to be a major problem. Most of the sales are bought from members of the public, meaning those lost sales can still be recovered.
Why Audi are number one
Driving an Audi in China is a sign of prestige. Many use their cars to show off the tremendous wealth which they may have.
Elimination of foreign cars
The Chinese Government has produced a preliminary list of cars that will be used for their fleet this year. The list of 412 cars doesn’t not only include Audi and BMW, there are no other foreign car manufacturers on the list. Is that fair? This may be harsh on Audi but the car’s announced in the list are a whole lot cheaper. Most of the vehicles are small cars which Audi do not currently have a major presence in at the moment.
Audi dealerships in China have announced that they have not heard any news yet.
Whereas this is clearly bad news for Volkswagen, it spells good news for the local car manufacturing industry in the country. Shares in many Chinese car brands have now increased thanks to the news.