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Business deals

Audi clinches sought-after production with China's SAIC

VW unit seeks to regain momentum in luxury cars in world's biggest auto market

An Audi sedan at Beijing's motor show in April. The German brand lost market share last year amid a spat with partner FAW Group.
An Audi sedan at Beijing's motor show in April. The German brand lost market share last year amid a spat with partner FAW Group.   © Reuters

SHANGHAI -- Audi will build and sell cars in China with SAIC Motor, aiming to seize more of the lucrative Chinese market by joining parent Volkswagen's venture with the country's biggest automaker.

Audi, for many years the dominant luxury car brand in China, acquired a 1% stake in SAIC Volkswagen from its German parent, Chinese media reported this week.

The move expands Audi's Chinese production base beyond an existing partnership with FAW Group, another state-owned automaker.

Audi agreed to explore joint production with SAIC in 2016, but that idea was stalled by opposition from its other Chinese partner.

The German company has been working with FAW since 1988, when it became the first luxury car brand built in China. FAW-affiliated dealerships balked at the idea of ceding sales of the high-margin cars to SAIC competitors, to the point where some dropped the brand for a time.

Audi appears to have reached an agreement that lets it team up with SAIC while maintaining its ties to FAW.

Audi's dispute with FAW cost it momentum in the Chinese luxury car market last year versus German rivals BMW and Mercedes-Benz. Tapping into SAIC's sales network could help speed its comeback.

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