Beijing Huayang Aotong, once Audi's "top-tier" dealer in China, will switch to AITO. Beijing Huayang Aotong Automobile Sales Co., Ltd. (hereinafter referred to as "Beijing Huayang Aotong") recently posted an announcement stating that it will no longer be engaged in the distribution business of the FAW Audi brand. On December 9, the reporter learned that after the termination of the cooperative relationship with FAW Audi, Beijing Huayang Aotong will switch to the AITO brand. At present, the store has replaced the "AITO" logo, and the AITO exhibition cars have also entered the store one after another. Beijing Huayang Aotong, once the largest Audi 4S store in Beijing, sold more than 20,000 new Audi cars in 2022. Behind its final switch to the new power brand, Audi's channels in China are facing difficulties. Since the beginning of this year, many Audi dealerships in China have been reported to be closed and withdrawn from the network. Under the price war of new cars, Audi, which exchanges price for volume, is gradually losing its price advantage, and dealers are beginning to choose to leave.

"Breakup" Audi

Beijing Huayang Aotong was formally established in 2010, and then built an "Audi Comprehensive Park" covering an area of more than 100,000 square meters 300 meters north of Beijing Gujiazhuang Bridge. The four main buildings in the park include new car sales, after-sales maintenance, training centers and hotels. Among them, FAW Audi 4S store officially opened in September 2012. According to statistics, in 2015, the monthly sales of Audi new cars in Beijing Huayang Aotong exceeded 300 for the first time; in 2017, the cumulative sales of Audi new cars reached 10,000; in 2022, the cumulative sales of Audi new cars exceeded 20,000.

At the same time, in the "Double Cup" competition where Audi demonstrated its global service level and technology, Beijing Huayang Aotong won the ninth place in the world and the national championship in the Audi Double Cup competition. In the 12 years since its establishment, Beijing Huayang Aotong has become the benchmark of Audi's pre-sales and after-sales system in China. Therefore, its sudden termination of cooperation with FAW Audi has caused heated discussions. Some netizens said: "The benchmark dealers have all withdrawn from the network, what happened to Audi?"

In fact, the brand adjustment of Beijing Huayang Aotong has already begun. This year, it rented one of the buildings in the Audi Park to Leading Ideal Auto, which became the Ideal Auto Comprehensive Center. In December this year, with a notice, Beijing Huayang Aotong officially terminated its cooperation with FAW Audi. The reporter saw in the "Audi Park" that the Wenjie brand was about to move in, and the "AITO" brand logo had been hung on the outer wall of the building next to the Leading Ideal Auto Comprehensive Center. At present, the AITO brand showroom is in the decoration stage. There are still posters of Audi models and introductions to the development history of the Audi brand in the showroom, but an AITO M7 exhibition car has entered the store in advance. An AITO brand staff member revealed that in mid-December this year, the entire series of AITO brand exhibition cars will arrive in the store one after another. At the same time, Beijing Huayang Aotong will not only sell new cars, but will also undertake the delivery center function of the AITO brand.

It is worth mentioning that although it has "broken up" with Audi, Beijing Huayang Aotong will continue to engage in the repair and maintenance business of Audi models. Beijing Huayang Aotong mentioned in the announcement that it will guarantee the maintenance and repair rights of consumers in the store and continue to provide services to consumers in accordance with the contract.

The Butterfly Effect

Since the beginning of this year, Audi dealers have been reported to close stores and withdraw from the network many times. Previously, the closure of "Yonghao Audi", the largest FAW Audi 4S store in Tianjin, attracted attention. Tianjin Yonghao Group issued a statement saying: "At this stage, the group is not only seeking funds to solve customers' car delivery problems and employees' salary problems, but also actively seeking support from brand manufacturers." At the same time, FAW Audi Beijing Mingzun Aoxiang 4S store located in Wufangqiao, Beijing, also closed this year, and the exhibition cars in the store have been withdrawn. In addition, two FAW Audi 4S stores in Hangzhou were also reported to be resold to other brands. As a high-quality Audi dealer, Beijing Huayang Aotong switched to AITO, which further reflects the crisis facing Audi's channels in China.

In fact, some Audi dealers withdrew from the network due to the operating pressure brought by Audi's declining sales. Data shows that in the first three quarters of this year, Audi delivered about 477,200 new cars in the Chinese market, a year-on-year decrease of 8.5%. Audi Group once said bluntly: "Audi is facing the challenge of intensified competition and shrinking high-end car market in the Chinese market."

New car sales are declining, and Audi dealers' price-for-volume exchange to boost sales has further expanded their losses. An Audi dealer manager told Beijing Business Daily that the most direct option to increase sales while ensuring the normal operation of funds in the store is to increase discounts, but the more you reduce, the more you lose. "Previously, the store sold about 130 new Audi cars per month, but the loss of new car sales that month reached 1.7 million yuan," he revealed. At the same time, some large dealers chose to stop losses by "eating" rent and other means. According to people familiar with the matter, Leading Ideal Auto's rent in Beijing Huayang Aotong is about 15 million yuan per year.

Cui Dongshu, secretary-general of the Passenger Car Market Information Joint Branch of the China Automobile Dealers Association, believes that this year's automobile market competition is more intense, which has also increased the pressure on most brand dealers. The slow sales of new cars have pledged dealer funds, coupled with the continued increase in discounts. Once the capital chain is broken, dealers may explode. Faced with market changes, dealers have also begun to transform to avoid risks.

It was revealed that Beijing Huayang Aotong had planned to operate both Audi and AITO brands, but because Audi disagreed, it finally chose to switch to the AITO brand. A person in charge of a luxury brand dealer said that the terminal price of traditional fuel vehicles fluctuates greatly, but the prices of new power brand models such as AITO and Leading Ideal are relatively stable. For dealers, maintaining prices and volume can guarantee profits.

Broken luxury "filter"

Independent brands and new car-making forces are on the rise, while the prices of Mercedes-Benz and BMW are falling, which makes Audi, which ranks third among BBA (Mercedes-Benz, BMW, and Audi), quite embarrassed.

In 2017, Audi stood at the watershed of sales in China, and the annual luxury car sales crown was changed to Mercedes-Benz. From 2017 to 2023, Audi's sales in China have always been behind Mercedes-Benz and BMW. Data shows that in the first three quarters of this year, BMW sold 524,000 vehicles in China, Mercedes-Benz sold 512,200 vehicles in China, and Audi sold about 477,200 vehicles in China. Mercedes-Benz and BMW are in a stalemate in competition, while further widening the gap with Audi.

In terms of new car sales, compared with Mercedes-Benz and BMW, Audi's new car discounts continue to be high. According to statistics, in the first seven months of this year, Audi's terminal new car discount rate was close to 30%, BMW was 25%, and Mercedes-Benz was close to 20%. During the same period, the average discount rate in the Chinese auto market was 14%. From the official guidance price of new cars, taking FAW Audi A4L and Brilliance BMW 3 Series as examples, the official guidance price of the former is 321,800-400,800 yuan, and the official guidance price of the latter is 319,900-399,900 yuan. In the eyes of the outside world, although the official guidance prices are close, the terminal price of Audi's new cars has always been lower than that of BMW and Mercedes-Benz for many years, which has formed the impression of Audi as a "cost-effective" luxury brand in the minds of consumers, further weakening the brand's premium ability.

"This year's market price war is more intense, and the discounts in the store have bottomed out." A salesperson at FAW Audi 4S store said that taking A6L and Q5L as examples, even in the rush stage at the end of last year, the highest discounts of the two models could be stable at more than 70% off, but this year's discount strength once reached 6.9% off. Yan Jinghui, a member of the Expert Committee of the China Automobile Dealers Association, believes that the exchange of price for volume for many years has invisibly damaged the luxury brand value of Audi. At the same time, under the price war of new cars, the prices of Mercedes-Benz and BMW have dropped, which has gradually reduced the price advantage of Audi models and increased the pressure on dealers.

In fact, Audi faces challenges not only from Mercedes-Benz and BMW, but also from new car-making forces such as NIO, Leading Ideal, and AITO that are replacing traditional luxury brands. Leading Ideal CEO once said that he was not worried about the sales of domestic "friendly competitors", but aimed at the traditional luxury brands BBA. In the eyes of the outside world, Audi, which ranks last among BBA, has become the first target of "grabbing food" by new car-making forces, which also makes Audi "attacked from both sides" in China.

Under the trend of electrification and intelligent transformation in the Chinese auto market, Audi faces great pressure to maintain its market share. In response, Audi has accelerated its electrification transformation in China through FAW Audi and SAIC Audi. However, Audi's "luxury + new energy" has not become a plus point. Taking FAW Audi Q4 e-tron as an example, the sales volume in the first 10 months of this year was 13,300 units, a year-on-year decrease of 27%, and the average monthly sales volume was about 1,300 units. Its sales volume in the first 10 months was even less than the monthly sales volume of the leading domestic new energy vehicle companies. In the terminal market, the comprehensive discount of this model has reached more than 100,000 yuan. Yan Jinghui said that in the competition in the new energy vehicle market, many multinational automakers have not yet created "explosive" products. At the same time, as domestic brands and new car-making forces continue to run wild, how to quickly "make up for lost time" in the Chinese market has become an urgent problem that brands such as Audi need to solve.