Audi's China sales plunge amid dealer dispute as rivals catch up

[FRANKFURT] Audi's auto sales in China slumped in January after the Volkswagen AG luxury marque struggled to contain a dispute with dealers in its largest sales region, adding to woes triggered by the German manufacturer's diesel-emissions scandal.

Deliveries in the country plunged 35 per cent from a year earlier to 35,181 vehicles, VW's biggest earnings contributor said Tuesday in a statement. Global sales dropped 14 per cent to 124,000 cars as gains in Europe and the US failed to offset the contraction in China.

"In Europe and North America we managed to reach more customers than ever before," sales chief Dietmar Voggenreiter said in the statement.

"In China, we remain optimistic for the future business development as well."

January's decline deepens Audi's troubles in the world's biggest auto market, where its lead as the best-selling luxury-car brand is being challenged by rivals Mercedes-Benz and BMW.

The conflict with Audi's Chinese dealers comes at a delicate time for Volkswagen, which relies on profits from the country to stem the unprecedented financial hit it's taking in the wake of its emissions-test cheating.

Demand in China has been largely unaffected by the scandal that involved some 11 million cars across the VW group worldwide because diesel models account for only a tiny part of the country's market.

SAIC Role Dealers in China have been pushing back against Audi's plan to add SAIC Motor Corp as a second joint-venture partner and even threatened to suspend sales.

Audi intends to expand cooperation with SAIC - including sales and production - to broaden its Chinese operations and reduce dependence on its primary partner, FAW Group Corp. Volkswagen and SAIC already make VW-brand and Skoda vehicles together.

While Audi has been the country's top-selling premium-car nameplate for decades - and it still has a 30 per cent market share - Mercedes and BMW have recently been posting faster growth by drawing in buyers with flashier models. Mercedes's Chinese deliveries surged 39 per cent in January, surpassing 50,000 cars for the first time.

BLOOMBERG