UPDATE 1-Audi says sees more China growth, rising car sales


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By Tamora Vidaillet

BEIJING, May 17 (Reuters) - Audi, the luxury arm of German carmaker Volkswagen , aims to boost sales in China to 80,000 cars this year from 63,000 in 2003 and expects the market to keep growing, senior Audi executives said on Monday.

Sales in China by Audi, which has been struggling to expand profits worldwide, jumped 28 percent in the first four months of this year to 22,601 cars, a portent of further success, they told reporters.

The auto market has surged along with the overall economy, but fears have risen that it could face a downturn if government attempts to cool the economy fail and a hard landing results.

China grew 9.8 percent in the year through the first quarter of 2004, partly due to excessive investment growth that has caused policymakers to worry the boom could turn to bust.

"The market in China will continue to grow, although there are different statements being made," Audi chief executive Martin Winterkorn said.

"I don't know what the percentage is, but it's certainly going to continue to grow," he told reporters.

Management board member Erich Schmitt said the German-based firm aimed to sell between 70,000 to 80,000 cars in China this year, compared to around 63,000 in 2003. But he acknowledged it was hard to tell if China's efforts to prevent overheating in the economy would harm the likes of Audi.

"The government is trying to slow down economic growth, but whether that's going to have any repercussions on us I don't know. We'll just have to wait and see," he said.


China has singled out autos as one of the markets in which there is runaway investment that could lead to overcapacity.

Schmitt said Audi still had the option to increase its capacity, now close to 100,000 cars per year, given that it could potentially tap a planned capacity increase at a Volkswagen plant in the northeastern city of Changchun.

Audi capacity was likely to stand at a little over 100,000 units by the middle of 2005, he said.

China is the firm's most important market after Germany and Britain.

Audi's China sales include locally made A6 saloons and A4 compacts and imported products such as the TT coupe, Quattro sports sedan and the revamped A8, which is selling for between 1.2 million and 1.5 million yuan (($145,000 and $181,200).

Audi, which dominates the luxury car market in China, is gearing up for more competition from German rivals BMW AG and DaimlerChrysler .

Chinese Premier Wen Jiabao visited the headquarters of Audi AG in Germany this month, during his first trip to Europe since taking office.

Due to its high-double digit growth rates, the Chinese passenger car market became Volkswagen's most important single market outside of Germany in 2002. The Volkswagen group has a market share of more than 30 percent in China. ($1=8.277 Yuan)



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