Audi's "Civil War": When the Biggest Enemy Is Your Own People
Hello everyone, I'm your financial journalist friend. Today, we're going to talk about a particularly interesting—and even somewhat absurd—business phenomenon.
If you ever go to an Audi dealership to buy a car or follow the car industry news, you might notice something that goes against intuition: The biggest competitor for Audi in China is not Mercedes-Benz or BMW next door, nor is it the fiercely competitive BYD or Tesla. Instead, it's... another Audi.
That's right, the same Audi brand, but operated by different shareholders, teams, and with different strategies.
It sounds like a joke, but it's the harsh reality of China's luxury car market today. Audi has implemented a "division into north and south"—SAIC Audi and FAW Audi, each fighting its own battle. Let's break down this "civil war" between brothers in plain language and see what's really going on. Can this division actually save Audi's sales?
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Why Did Audi Decide to Divide into North and South?
First, we need to understand why Audi doesn't have just one "leader" in China, like Mercedes-Benz or BMW (with Beijing Mercedes-Benz and Brilliance BMW, respectively).
1. A Legacy of "Dual Systems"
This dates back to the 1990s. When Audi first entered the Chinese market, it sought two partners to quickly expand its presence:
- FAW Audi focused on classic models like the A6L and Q5L, pursuing a "sturdy, business-oriented, traditional luxury" approach.
- SAIC Audi joined later, focusing on models like the A7L, Q5 e-tron, and Q6 e-tron, aiming for a "youthful, tech-driven, differentiated" image.
2. The Initial Intent was to Complement Each Other, but in Reality, They Compete
The idea was that FAW Audi would maintain its core market, while SAIC Audi would target new markets. However, the problem is that Chinese consumers recognize the Audi brand, not whether it's from SAIC or FAW.
It's like KFC and Pizza Hut both belonging to the same company, but if you open two stores next to each other, both selling hamburgers just with different packaging, customers will think, "Are these two stores in the wrong place? Which one should I go to?"
The Result?
- When SAIC Audi tried to launch new models, FAW Audi would lower the prices of its older models, stealing its customers.
- When FAW Audi wanted to protect its profits, SAIC Audi would offer discounts, damaging the brand's image.
- Both teams were competing for the same customers, dealerships, and media attention in the same market.
In simple terms: It's like one company splitting its sales team into two, both selling the same product and undercutting each other. In the end, no one makes a profit, and customers feel the brand is confused.
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What Makes the "Other Audi" Such a Threat?
Many people wonder: If they're both Audis, why has SAIC Audi become such a major threat to FAW Audi?
**1. SAIC Audi's "Novelty and Speed"
SAIC Audi started later and has fewer constraints, so it's more willing to try new things:
- A7L: With its coupe-style design, it targets a younger, more sporty audience, competing directly with the BMW 4 Series and Mercedes-Benz C-Class.
- Q5 e-tron / Q6 e-tron: Built on an electric platform, these models showcase a strong technological edge, trying to gain a foothold in the electric vehicle market.
These models didn't exist in FAW Audi's product lineup, so SAIC Audi is "stealing" market share that FAW Audi could have captured with faster product updates and more agile decision-making.
2. The Intense Price War
To compete for market share, SAIC Audi often uses aggressive promotional tactics like time-limited discounts and financial incentives.
- For example, when the SAIC Audi Q5 e-tron was discounted, its price dropped into the 200,000 RMB range.
- FAW Audi's Q5L owners or potential buyers might think, "Wait, the other Audi is cheaper and has more technology—why buy yours?"
3. Conflicts in the Dealer Network
This is the most critical issue:
- FAW Audi has a well-established dealer network across the country.
- SAIC Audi is also building its own channels, sometimes even setting up stores next to Audi dealerships.
- The Result: Dealers in the same city sell both FAW and SAIC Audi cars, leading to complaints from each other about undercutting prices and customer loss.
In simple terms: SAIC Audi is like a "rebellious new employee" that innovates, discounts, and takes market share, while FAW Audi is the "old employee" that's steady but slow to respond.
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Why Don't Mercedes-Benz and BMW Have This Problem? How Beneficial Is Their "Single System"?
Comparing Mercedes-Benz and BMW makes Audi's division even more awkward:
1. Mercedes-Benz: One Leader, Unified Command
- Beijing Mercedes-Benz is the sole production base.
- All models (C-Class, E-Class, S-Class, GLC, etc.) are planned, priced, and marketed by one team.
- Advantage: Stable price structure and unified brand image, with dealers not competing with each other.
2. BMW: One Leader, Efficient Execution
- Brilliance BMW is also the sole production base.
- BMW's strategy in China is clear: focus on profit from fuel vehicles while gradually expanding into electric vehicles (iX3, i3).
- Advantage: Centralized resources and quick decision-making, avoiding internal competition.
3. The Cost of Audi's Division
- Brand Dilution: Consumers are confused about which Audi is the real deal.
- Resource Waste: Both teams have to spend on advertising, events, and building channels, doubling the costs.
- Strategic Chaos: One team aims for luxury, the other for value for money, leading to a blurred brand position.
In simple terms: Mercedes-Benz and BMW are "one family with one heart," while Audi is "one family with two hearts." Unity within the company is more important than external competition in a competitive market. Audi's internal divisions weaken its ability to compete with Tesla and BYD.
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How Long Can Audi's "North-South Division" Survive in the Electric Vehicle Era?
The automotive market is shifting from fuel vehicles to electric ones, and Audi's division is becoming more apparent:
1. Electric Vehicles Require Rapid Iteration
- Tesla and BYD update their electric models annually or even semi-annually.
- Audi's electric vehicles face a long decision-making process involving two teams, two factories, and two channels, making them slow to respond.
- *For example, when the SAIC Audi Q5 e-tron was released, the market had already shifted towards more advanced features like smart infotainment and autonomous driving, which Audi's models lacked.*
2. The Complete Collapse of the Price System
- In the fuel vehicle era, Audi relied on its brand premium.
- In the electric era, consumers value cost-effectiveness and technology.
- SAIC Audi had to lower prices to compete, damaging its brand image.
- FAW Audi, trying to protect profits, couldn't follow suit, leading to declining sales.
- The Result: Audi's electric vehicles lack the technology of Tesla and the cost-effectiveness of BYD, and they carry the high price tag of a luxury brand, failing to appeal to both consumers and competitors.**
3. Dealer Loyalty Crisis
- Dealers are interested in making money, not doing charity.
- If selling SAIC Audi cars is unprofitable and risky, they may shift to FAW Audi or other brands.
- If both Audi brands undercut each other, dealers' profits are squeezed, leading to a loss of confidence in the brand.
In simple terms: In the electric era, speed and efficiency are key. Audi's division is like one leg moving fast and the other slow, making it hard to keep up.
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Can Audi Save Itself? Is There a Solution to the "North-South Division"?
Let's answer the core question: Can Audi's division save its sales?
My opinion is: It's unlikely and may even backfire.
Short Term: Internal strife will continue, putting pressure on sales.
- As long as the two Audis compete, price wars will persist.
- Consumers will remain confused, and brand loyalty will decline.
- Dealers will continue to complain, reducing channel efficiency.
Long Term: One of two options is needed:
- Merger: Combine SAIC Audi and FAW Audi into one entity with a unified brand, channels, and pricing. However, this is highly complex and difficult.
- Differentiation: SAIC Audi could focus on luxury electric vehicles, and FAW Audi on traditional fuel vehicles. But with the growing demand for electric vehicles, this strategy might not be effective.
The Real Challenge Isn't the "Other Audi"—It's the New Competitors
Audi's biggest threat comes from external brands like Tesla, BYD, NIO, and Li Auto, which are disrupting the market.
- When consumers consider cars in the 200,000-300,000 RMB range, they won't care about whether it's SAIC or FAW Audi; they'll ask, "What are the advantages of Audi's electric vehicles?"
- If Audi can't provide compelling answers quickly, the division won't help sales.
In simple terms: Audi is like a ship with a leaky bottom and people fighting among themselves. If it doesn't fix the leak (accelerate its electric and digital transformation) and stop the fight (integrate resources), it will eventually sink.
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Conclusion
Audi's division in China is a typical example of a strategic mistake. It originated from past success but has become a barrier to its growth.
For Consumers: If you're considering buying an Audi, compare the models and prices of both brands to find the best deal and service. But be aware that Audi's electric vehicles may not be as appealing as you think.
For the Industry: Audi's case serves as a reminder to all traditional automakers that unity within the company is more important than external competition. Division is a major mistake for luxury brands.
Finally, I want to know: If you were the CEO of Audi, would you merge the two divisions or let them continue to compete? Feel free to share your thoughts in the comments.