Who's the winner? SAIC Audi sales channel finally finalized

Four years after SAIC signed a deal with Audi, the SAIC Audi project has finally reached a milestone.

On December 23rd, Audi, China FAW and SAIC*** announced that the products produced by SAIC Volkswagen Audi in the future will be sold by the existing FAW-Volkswagen Audi investor network for sales-related and after-sales services.

So far, Audi, FAW and SAIC have found a balance of their interests in this tug-of-war, and all are happy. The SAIC Audi project has also cleared the last hurdle, allowing it to formally move forward in a big way.

Maintaining the existing investor network

The most crucial and interesting point in this joint statement is undoubtedly FAW-Volkswagen Audi's "investor network," which means SAIC Audi can set up its own sales channels, but it must be selected from the existing investor network, and after-sales service and other related work will also be handled by existing Audi dealers. This means that SAIC Audi can set up its own sales channels, but it must choose from the existing investor network, and after-sales service and other related work will be handled by the existing Audi dealers, which maximizes the interests of Audi's existing dealers and investors, and also avoids the risk of competing interests in the channels.

In this way, FAW-Audi dealers seem to be the biggest winners, and SAIC has compromised a lot. But from another perspective, as long as the new sales network, do not need to repeat the construction of after-sales network, but also for SAIC to save a lot of resources. Moreover, SAIC Audi's statement also mentioned that it "will open up the information barriers in marketing, sales, after-sales and service to create a convenient, reliable and exclusive e-commerce eco-experience", which indicates that SAIC Audi's products will be sold outside the traditional physical sales to try new sales and after-sales service modes to meet the consumers' more personalized needs. More personalized needs, can be said to retain a certain amount of space to play.

More new models in China

In the part of the car that everyone is most concerned about, Audi will not adopt the product strategy of "one model produced by two parties" because of the "independent" sales channel behind the surface. "The product strategy, but the direct introduction of newer and richer localized products. Officials announced that by 2021, Audi will work with FAW to expand the lineup of locally produced models to 12. 2024, Audi will work with FAW to begin production of the first electrified model based on the PPE platform.

Audi SAIC's first model will be introduced in 2022, and based on the information that has come to light and the spy photos that have been flying around for a long time, it should also be the SAIC Audi A7L. In terms of electric models, SAIC Audi's electrified products will be based on the MEB platform, with a focus on small to mid-sized pure electric vehicles.

From the distribution of products and technologies, it can be seen that FAW-Volkswagen Audi still gets more resources. Audi's high-end domestic electrified product layout also started from FAW-Volkswagen Audi, which also ensures that in the era of new energy vehicles, FAW as Audi's core partner status. After all, three decades of development have long established FAW-Audi's unshakeable "palace status", and it makes sense that it would have a strong voice in this three-way game.

Who is the winner?

Many people may wonder why SAIC has to share this "meat and potatoes" since Audi has been very successful in China and FAW-Audi's position is so supreme.

The main driving reason is still the market potential. In this year's economic downturn, China's luxury car market still maintains a surprisingly high rate of growth, the market judgment in the next five years, the luxury car market there is about 25% growth space. Whether this prediction is accurate or not, the Chinese market demand for luxury brands is evident ****, the luxury car market has a lot of potential to dig.

Thus, Audi needs SAIC, its local partner, to speed up its development and exploration of the Chinese market, so as to take the lead in the competition with Mercedes-Benz and BMW. SAIC also needs Audi to complete its own brand and product matrix and increase the profit of the luxury brand. As for FAW-Volkswagen Audi, it holds the right to speak in the channel, its core interests have not been affected, tilted to their own products and technology distribution also allows it to eat a "peace of mind". Under this premise, FAW-Volkswagen Audi will be happy to expand the Audi brand's market share and influence in China.

And, in the previous agreement, SAIC and Audi in the joint venture project share ratio of 50:50, while Audi in the FAW-Volkswagen joint venture company accounted for only 5 percent of the share, the entire Volkswagen Group's combined share is only 40 percent. A partnership with SAIC would undoubtedly also give Audi a bigger share of the profits, so why not?

The four-year channel dispute has ended here, and it's surprising and reasonable to say that everyone is happy. Obviously, there are no losers in this game, but who is the real winner will have to wait for the answer given by the market after the launch of the SAIC Audi models.

This article was written by the author of "Auto Home" and does not represent the position of Auto Home.