Audi denies Q5 to be built in China

ODED BALILTY/ASSOCIATED PRESS

The Audi Q5 at the Auto China 2008 auto show in Beijing April 20, 2008.

REUTERS NEWS AGENCY

BEIJING–Audi, the premium subsidiary of the Volkswagen Group, has not yet decided whether to build the new smaller SUV, Q5, in China where it had the world premiere for the vehicle at the Beijing Auto Show.

"My first focus is on sales," Rupert Stadler, chief executive, told reporters, adding the firm was working to boost production capacity in China for the vehicles it currently makes, such as the Audi A6 L, a special long version for the country.

Stadler brushed aside media reports that the Q5 would also be built in China – which has become its "second home" base.

"We have been in China for 20 years, we have invested and now we are seeing the benefits of it," he said.

Daimler chief executive Dieter Zetsche earlier in the day said Audi cars in China were "volume" premium cars and noted that Audi benefited from supplying cars to the government.

"And what is wrong about that? We saw an opportunity and ceased it," Stadler said, adding Audi aimed to remain the leader in its market segment in China where it has a share of 45 per cent. Stadler said this market share was "unusual" for Audi compared with other markets where it competes with Daimler's Mercedes-Benz and BMW

"It is nicer to speak about our advantage in China than about our delay in the United States," he said.

Audi entered the Sports Utility Vehicle segment with the Q7, which was a success in Europe and enhanced its reputation in the United States. The company is now looking for a production facility there.

"Over the past few months, the currency situation has worsened. But this is a long-term decision. We are still studying the options," Stadler said, adding much depended on the supply base in the United States as Audi would like to have a natural currency hedge.

In the first instance, Audi is looking at the feasibility of doing something alone. In the second, it would look whether it could do something in the United States with parent Volkswagen. He said a decision needed to be taken before the end of 2009.

Stadler said the Q5 could have better sales than the Q7, which is bigger and more expensive, and he did not exclude a new model smaller than the Q5.

"Why not? But it is a step-by-step, top-down approach," he said.

Audi sold 100,000 cars in China in 2007, and in the first quarter sales rose another 25 per cent. But Stadler said, cautiously, that he expected to sell more than 110,000 cars in China in 2008. He noted that car sales could be hurt during the Olympic Games, when many people spend hours in front of their television screens.

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