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US brands Lincoln, Cadillac chase Germany's Audi in China luxury market

BEIJING--Classic American luxury brands Lincoln and Cadillac are taking on Germany's long-dominant Audi in China, but face a market leader fortified by enviable brand awareness built over years as officialdom's favorite car.

Black Audis — with their four interlocking ring symbols, signifying the long-ago merger of four German auto companies — are ubiquitous at state events, such as the annual meeting of China's legislature in central Beijing.

Audi, which last year celebrated its 25th anniversary in China, has benefited from its early entry into the market and the prestige its badge holds among high-profile passengers, selling just short of 500,000 vehicles in 2013.

German manufacturers — Audi, BMW, Mercedes and Volkswagen — dominate the premium segment, with 80 percent market share, the consultancy McKinsey said in a report last year.

Now other players are hoping to take advantage of what executives and analysts call a “broadening” of the segment, such as General Motors' Cadillac and Ford's Lincoln — American luxury brands with illustrious traditions at home where they have served as official cars for American presidents.

China's economy has surged to become the world's second-largest, and its auto market has overtaken the United States as the biggest.

That means a growing middle class is increasingly able to afford premium marques, while at the same time the government has been attempting to promote home-grown vehicles for official use.

The foreign ministry last year announced that minister Wang Yi was using a Hongqi, or Red Flag, vehicle — having switched from an Audi A6, according to Xinhua.

Luca de Meo, Audi board member for sales and marketing, told reporters ahead of the 2014 Beijing auto show that the carmaker “has always been very honored” at official use of its vehicles.

But the situation has changed, de Meo said, adding that Audi has the “right strategy ... to compensate for this.”

John Zeng, managing director of LMC Automotive Consulting, said that Audi has sought to widen its customer base.

“They have been putting their focus on the family car” over the past four or five years and are targeting younger consumers, he told AFP.

Jim Farley, a top Ford executive, sees the dominance by a few in China as an opportunity.

“The ubiquity of the product on the street fights with the exclusivity of the brand ... there are opportunities for challenger brands,” he told reporters at the auto show.

“But the responsibility of the challenger brand is they have to offer something better and different.”

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This photo taken on Monday, April 21 shows visitors having a look at the BMW X5, right, and the BMW X3 on display at the China International Exhibition Center during the Auto China 2014 Beijing International Automotive Exhibition. Bulky, brash and wildly popular in Europe and the U.S., the urban 4x4 is the latest must-have for Chinese drivers.

(AFP)

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