In recent times, the automotive industry has been undergoing significant upheaval, particularly in China, where established car manufacturers are reeling under market pressuresThese developments have opened doors for emerging players, notably Huawei, a technology giant that is venturing into the automotive sector with newfound vigorThe global automotive rankings are shifting rapidly, and brands once dominating the Chinese market, particularly Japanese automakers, are witnessing a dramatic drop in sales.

This decline is not limited to regular brands; even luxury vehicles are encountering their share of challengesAudi, a marque synonymous with luxury, is struggling considerablyIts latest quarterly financial report revealed a staggering 91% plunge in operational profit for the third quarter, dwindling to a mere €106 million, which starkly highlights its current plight.

The company faces the grim prospect of factory closures, including a notable development where some Audi dealerships, once proud purveyors of the renowned brand, have begun selling Huawei vehicles

This scenario prompts critical questions: How did Audi, a once-celebrated player in the Chinese automotive market, find itself in such dire straits? Is Huawei a disruptor or a harbinger of innovation in this competitive landscape?

The crux of Audi's troubles lies in the potential closure of its Brussels factory, resulting in skyrocketing costsThis financial distress has compelled Audi to resort to layoffs and other cost-cutting strategiesThe company has announced plans to shutter its Brussels facility and lay off approximately 3,000 employees—15% of its total workforce—including roles outside of the production sector.

While Audi has attempted to boost sales through aggressive pricing strategies, these efforts have been a double-edged swordAlthough the volume of sales for models like the Audi A4 has seen slight increases due to price cuts—its cost plunging from near CNY 300,000 to around CNY 220,000—the anticipated profit has not materialized

• U.S. Key Data Released: Is December Rate Cut Inevitable?
• Biotech Explores Funding Options Beyond Deals
• Why the Dollar Is Bucking the Trend of Rate Cuts
• ECB Rate Cut Warnings Mount
• Layered Computing Drives Industry Consolidation

In certain locations, the price of the A4 has dipped below CNY 200,000, underscoring the brand's desperate measures.

Even further up the luxury hierarchy, the Audi A8L witnessed a shocking price reduction, dropping from CNY 1.1868 million to CNY 792,400, marking a 33% declineYet, faced with such aggressive pricing, Audi's global deliveries for the third quarter still reflected a downturn of 16% year-on-year, with particular declines in the U.Smarket reaching 21%. This downturn in sales is forcing many dealership locations to shut down or pivot to alternative business models.

Just recently, Beijing Huayang Auto Sales Co., once the largest Audi 4S dealership in Beijing, ceased its Audi sales operations to begin selling Huawei's Aito electric vehiclesFurthermore, not just Audi, but luxury brands like BMW are also grappling with similar challenges, leading many of their dealerships to close.

Among them, a prominent Audi sales center in Tianjin has closed, drawing significant attention

However, it should be noted that Huayang Auto is not closing down entirely; instead, it is making a strategic shift toward marketing Huawei Aito vehiclesThis signals a noteworthy conflict and cooperation between traditional automotive companies and new market entrants.

The transition undertaken by Huayang Auto raises concerns about the quality and availability of after-sales servicesThe company has assured existing Audi customers that it will continue to provide maintenance and support for their vehicles, thus protecting consumer rights during this transformation.

Audi's Decline

Audi's rapid descent from a position of strength to one of vulnerability cannot help but evoke a sense of nostalgiaThe question beckons: What factors have conspired to trigger Audi's swift fall from grace? Is it merely the shifting tides of the market or a sign of deeper systemic issues?

Audi's troubles are multifaceted, driven by intense market competition and changing consumer preferences

The brand appears to have lost its way, particularly in the wake of domestic electric vehicle manufacturers gaining tractionCompanies like BYD have outpaced Audi considerably, with November sales hitting an astonishing 500,000 units, a clear indicator of the electric vehicle's burgeoning dominance.

In the traditional fuel-based automotive sphere, Audi is up against fierce rivals such as Mercedes-Benz and BMW, while in the realm of electric vehicles, competition has reached a fever pitch.

Beyond external competitive pressures, Audi is grappling with significant issues in product strategy and planning as wellA key concern is the perceived stagnation in Audi's interior design, which lacks the innovation necessary to captivate modern consumers.

Models like the Audi A4 and A8 exhibit a design language that feels repetitive, particularly when compared to the more advanced technological offerings from competitors such as Mercedes-Benz, which place high importance on integrating cutting-edge technology and luxury into their user experience

Audi's interior aesthetics appear dated, failing to resonate with the younger demographic increasingly shaping purchasing decisions.

Moreover, in a consumer landscape that favors large screens, Audi's small screens look increasingly out of touchThe technology governing their infotainment systems has also been criticized for lagging and being user-unfriendly, presenting issues that are all too familiar to contemporary consumers.

High operational costs, including fuel consumption and maintenance, are additional deterrents for potential buyers, especially as new energy vehicles press an increasing array of advantagesAudi's once-coveted fuel vehicles now seem less competitive against this backdrop.

As traditional automakers flounder, Huawei is capitalizing on the tumultuous situation

The tech giant is rapidly expanding its footprint in the automotive sector, leveraging strategic partnerships and technological capabilitiesIts collaboration with the Zhongsheng Group, which operates over 50 Huawei HarmonyOS smart vehicle stores, is a testament to Huawei's escalated ambitions in this fertile ground.

Zhongsheng Group, as China's largest automotive distributor, equips Huawei with a formidable platform to accelerate its growth in the automotive domainThis synergy is already transforming traditional dealerships, some of which are transitioning to upscale Huawei HarmonyOS intelligent vehicle outlets, thereby reinvigorating their business models.

Notably, Zhongsheng has vowed that these adaptations will not compromise existing brands' service offerings, alleviating consumer concerns regarding loyalty and service continuity.

Huawei has also made strides in partnerships with companies such as Dongfeng Nissan, suggesting its intent to deepen its integration in the automotive landscape

By equipping vehicles with its Harmony system, Huawei aims to position itself as a technological frontrunner within the automotive space.

The entrance of Huawei into this space brings both problems and opportunities for legacy car manufacturersNot simply a competitor but a source of transformational partnership, Huawei's strong market presence and expertise offer planting opportunities for traditional companies to revitalize their product lines and ecosystems.

For legacy automakers grappling with losses, adapting to evolving market dynamics and consumer preferences is imperative for survivalIncreased investment in research and development, alongside quicker incorporation of electric vehicle technologies and smart systems, could enable them to regain competitiveness in a saturated market.

Collaborating with tech giants like Huawei presents traditional manufacturers with an avenue for accelerated transformation, marrying technological prowess with traditional automotive expertise to meet the nuanced demands of modern consumers.

Huawei's foray into the automotive sector has introduced a refreshing wave of innovation, creating prospects for traditional firms to enhance their product offerings and operational methodologies.

The future of the automotive landscape appears poised for diversification, with emergent collaborations between traditional manufacturers and technology firms expected to shape this evolving arena.