November 16, 2017 / 11:54 AM / a month ago

Strong November-December seen lifting Audi's 2017 China volumes into growth

GUANGZHOU/BEIJING (Reuters) - German automaker Audi (NSUG.DE) expects sales volumes in China to grow strongly enough in November and December to reverse a 3 percent decline there in the first 10 months of the year.

Joachim Wedler, the head of the brand’s Chinese business, told Reuters on Thursday he expected a small single-digit percentage rise in full-year volumes in the world’s biggest auto market.

“We had some challenges in the first five months, but in the end of the year we will be back,” he said in an interview ahead of the Guangzhou auto show.

“Last year we sold 585,000 vehicles (in China). In 2017 we will be ahead so we will touch very close to the 600,000 mark.”

Wedler did not provide a specific sales forecast for 2018.

“We are expecting the premium market next year to grow single digit, and we are positive we can follow the premium market percentage,” he said.

Chinese sales at Volkswagen-owned (VOWG_p.DE) Audi slumped earlier this year after its relationships with existing retail store operators soured in the wake of its move to set up a second Chinese joint venture with SAIC Motor (600104.SS).

According to industry experts, the move angered Audi’s existing dealers, which sell cars produced by its joint venture with FAW [SASACJ.UL].

The existing dealers stopped stocking Audi cars in protest, experts said. This, along with the aging Audi A6 sedan, depressed Audi sales, they said.

“This dealer issue lasted for more than half year and it was a serious issue,” Yale Zhang, head of Shanghai-based consultancy Automotive Foresight, said.

    “The other issue is the A6. The car is aging and it is in the final stage of its lifecycle. It just cannot compete with the new Mercedes E-class and the redesigned BMW 5-series.”

    Wedler said Audi’s relationship with its dealers has been fully restored after an agreement it signed with them in May.

    A redesign of the A6 is in the works, and 2018 will see a global launch of the new car, Audi officials said. The company has not communicated publicly when the redesigned A6 might hit the market in China, they said.

    Audi plans to launch five so-called new-energy vehicle models (NEVs), all locally produced in China, over the next few years. New energy vehicles refer to all-electric battery cars and plug-in electric hybrids.

    The Guangzhou auto show starts on Friday.

    Reporting by Beijing Newsroom and Hong Kong Newsroom; Editing by Mark Potter

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