Race is on after sales in luxury segment soared 95% last year

BEIJING - German luxury carmaker Audi AG plans to more than double its production capacity in China over the next four years in an aggressive move to continue its reign in the fast-growing luxury segment.

An Tiecheng, president of Sino-German joint venture FAW Volkswagen Automobile Co Ltd, said the tie-up will hike production capacity of Audi cars to around 700,000 units a year by 2015 from 300,000 units this year.

An Tiecheng, president of Sino-German joint venture FAW Volkswagen Automobile Co Ltd

According to the plan, the joint venture will have an annual Audi production capacity of 500,000 units at its home base in Changchun, Jilin province.

Capacity at its newly approved plant in Guangdong will reach 200,000 units by 2015.

Chinese auto group FAW Corp has a 60 percent controlling stake in the joint venture, with remainder held by Volkswagen Group and its affiliate Audi.

The joint venture also makes a slew of Volkswagen models such as the Magotan, Sagitar and Golf. Its overall production capacity will reach 1.65 million units a year by 2015, An said. It also has a manufacturing facility in the western city of Chengdu.

Audi's China sales grew by 28 percent year-on-year to 139,130 units in the first half of this year, enabling the country to outstrip Germany as the world's biggest market for the brand for the first time.

Yet Audi, the first luxury brand producing cars in China, is now trailed more closely in the market by archrivals BMW and Mercedes-Benz.

In the first half of the year, BMW moved 121,614 vehicles in China, a surge of 60.8 percent. Mercedes-Benz's sales jumped by 52.3 percent to 92,200 units.

An said Audi's sales in China are expected to hit 300,000 units this year, up from 225,588 in 2010.

"We are aiming to be the strongest premium car manufacturing base in China through our full-value-chain localization in terms of suppliers, R&D and product portfolio, manufacturing, quality assurance, talent and organization management," An said.

Boesch said the brand is confident of maintaining its leadership in China as it has a "deep understanding" of the Chinese market through more than 20 years of collaboration with its local partners.