Car maker Audi, the luxury arm of Volkswagen, aims to increase its annual sales in China to more than 100,000 vehicles over the next three to four years, despite mounting competition from rivals BMW and Mercedes, according to a top executive of the company.

In an interview with China Daily, Ralph Weyler, an Audi board member responsible for sales and marketing, said the company's global sales are expected to reach 1 million vehicles by 2008 or 2009, with at least 100,000 of those in China.

Audi's retail sales in China will grow slightly this year from last year, Weyler predicted, without providing a specific number. Audi is expected to sell 820,000 vehicles globally this year.

In the first 10 months of this year, the firm sold 41,108 vehicles in China, an increase of 1.2 percent from a year earlier, he said.

The sales included 1,565 Audi A8s, 32,216 A6s and 7,327 A4s. The A8 is sold in China as an import, while the other two models are made at Volkswagen's venture with First Automotive Works Corp (FAW), the nation's top automaker.

Volkswagen, together with Audi, is the only major global auto maker that has started to report sales to customers instead of dealers in China.

Audi has been China's luxury car market leader for many years, mainly due to its early decision to build cars locally.

But Audi is now facing challenges from BMW and Mercedes-Benz, whose sales in China are growing much faster than Audi's.

BMW, which started to make its 3 and 5 Series sedans in China in 2003 with China Brilliance Auto, sold 16,999 vehicles during the first three quarters of this year, up 36.4 percent from a year ago.

Meanwhile, sales of Mercedes climbed by 22 percent to 11,000 cars. Mercedes will start to make the E and C-Class sedans next month at its parent DaimlerChrysler's venture with Beijing Automotive Industry Corp.

Benjamin Asher, an analyst from Automotive Resources Asia Limited, the consultancy with offices in Bangkok, Shanghai and Beijing, said: "Mercedes will find many central and city government buyers in Beijing when they start production. Mercedes is also known as the car to ride in and China's established wealthy are still more inclined to ride than drive."

However, Weyler said Audi was not worried about losing market share to BMW and Mercedes as China's luxury market is still expanding.

"It's not now possible for a single brand (Audi) to control 50 or 60 percent of the market. BMW and Mercedes will get some market share," he said.

Analysts do not believe Audi will be out-sold by BMW or Mercedes in China in the near future, as its customer base, and its sales and service network, are both larger.

Audi has more than 110 authorized dealers on the Chinese mainland, compared with less than 60 for both BMW and Mercedes.

Weyler said Audi will launch the petrol-powered Q7, its first global sports utility vehicle, in China as an import next June. The 4.2-litre Q7 and a concept petrol-electric hybrid debuted in China during the on-going Third Guangzhou International Motor Show.

(China Daily November 24, 2005)