China drives July sales gain at Volkswagen's Audi

FRANKFURT Wed Aug 7, 2013 6:19am EDT

Audi logo sign is seen inside the lobby at the U.S. headquarters building of the Volkswagen Group of America in Herndon, Virginia, September 18, 2008. REUTERS/Larry Downing

Audi logo sign is seen inside the lobby at the U.S. headquarters building of the Volkswagen Group of America in Herndon, Virginia, September 18, 2008.

Credit: Reuters/Larry Downing

FRANKFURT (Reuters) - Volkswagen's (VOWG_p.DE) premium brand Audi reported a surge in July sales on Wednesday, helped by growth in China and rising demand for its Q3 compact sport utility vehicle.

Sales rose 9.8 percent last month to 131,300 vehicles, driven by a 27 percent jump in volumes in China, its single largest market.

For the first seven months of the year, sales rose 6.9 percent to 911,800 vehicles thanks to Audi's SUV range and the February launch of its A3 Sportback five-door compact, it added.

The brand repeated its goal to surpass full-year sales of 1.5 million vehicles in 2013, two years earlier than planned.

Audi is important to Volkswagen, playing a key role in bolstering the parent company's credit rating so it can fund an ongoing acquisition spree that has so far included truckmaker MAN (MANG.DE), Porsche's sports cars business and Italian motorcycle brand Ducati.

Were it not for Audi's 13.5 billion euros ($17.97 billion) in net cash at the end of June, Volkswagen's automotive business would have no war chest at all, and actually would have had to report it owed about 2.2 billion.

Audi said its Q3 compact SUV saw volumes surge over 60 percent in January through July as demand for smaller, cheaper, more fuel-efficient SUVs grows.

Rival Daimler (DAIGn.DE) has said that one reason its Mercedes-Benz brand lags Audi and BMW (BMWG.DE) is its lack of a product to compete against the Q3 and BMW X1.

Mercedes will unveil a series production model of its GLA compact SUV at this September's upcoming Frankfurt auto show, which may help the brand reduce its sales gap.

(Reporting by Christiaan Hetzner; Editing by Peter Dinkloh and Louise Heavens)

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