(Yicai) Oct. 27 -- Audi is drawing a clearer distinction between its two Chinese joint ventures. SAIC Audi will focus on electric vehicles produced under the German carmaker’s new AUDI wordmark, while FAW Audi will apply its traditional four-ring logo across combustion engine and premium new energy vehicles.

The change aims to sharpen the positioning and strategic priorities of the two brands while clarifying the “two brands, two partners” sales and distribution structure, Beijing-based Audi China announced yesterday. SAIC Audi can continue selling models bearing the four-ring logo through the end of next year, while FAW Audi will assume full responsibility for the four-ring brand, covering both the fuel and premium EV market segments.

The AUDI brand was co-developed by Audi and Shanghai-based SAIC Motor. They signed a deal in May 2024 on an intelligent digital platform for the Chinese market and then launched the AUDI luxury EV brand that November, marking the first time in Audi’s 115-year history that it had introduced a new brand. AUDI’s first production model, the E5 Sportback, went on sale just over a year ago and the electric E7X sport utility vehicle was launched this May.

SAIC Audi has found it difficult to focus on competing with domestic premium EV brands while managing both the four-ring brand’s combustion engine business and the newer AUDI EV marque, according to industry observers.

In addition, the four-ring fuel models sold by SAIC Audi overlap in pricing with those of Changchun-based FAW Audi, making it hard to maximize internal synergies, they said, adding that by clarifying the division of responsibilities between the two operations in southern and northern China, the restructuring removes ambiguity and could help the company allocate resources more efficiently.

SAIC Audi told Yicai that fuel car and EV buyers have very different profiles and expectations for products and services. Dealers must also follow different processes and meet different service requirements when dealing with the two groups. The distinction extends to automakers’ product planning and research and development. These differences have convinced SAIC Audi that making strategic trade-offs and focusing on a narrower market are necessary steps toward building a premium EV brand, it said.

Historically, there have been very few successful global examples of a single brand developing both combustion engine autos and EVs through the same sales channels and organizational structure. In China, Geely Automobile Holdings spun off Zeekr as an independent brand, Changan Automobile established Deepal and Avatr separately, and Chery Automobile launched iCAR. And after its NEV sales took off, BYD chose to halt production of gasoline cars in March 2022.

Editor: Tom Litting