Audi AG, the German luxury car brand, seeks a sales rebound in Hong Kong in the fourth quarter of this year on hopes the city will soon reopen its Covid-closed borders, a company representative said.
In the third quarter, the company saw a reasonable decline in its sales in Hong Kong due to the quiet market environment and investor transition period, Lothar Korn, Chief Representative of the Audi AG Hong Kong Representative Office, told Asia Times on Friday.
“We also have a supply issue. Since we had to shut down our factories in Europe in March and April, we only got the first shipment to Hong Kong for Kam Lung Motors in the end of August,” said Korn. “So far this year, we have seen a slight decline in our Hong Kong sales … this was due to the investor transition, market environment as well as the lockdown in Europe.”
In May, Audi announced an end to its long-term partnership with Dah Chong Hong Holdings and closed its showroom in Admiralty on May 27. Audi later said it had received an investment from Kam Lung Motors, which became the brand’s sole official distributor in Hong Kong on July 1 and will take on responsibility for its business operations in the city.
On July 31, Audi AG said its revenue fell 28.8% to 20.48 billion euros (US$23.79 billion) in the first six months of this year compared to the same period last year. It recorded an operating loss of 643 million euros in the first half, compared with an operating profit of 2.3 billion euros a year ago.
During the second quarter, Audi’s worldwide deliveries to customers fell 21.9% to 707,225 units from a year ago. Deliveries dropped 36.8% to 265,047 units in Europe and decreased by 24.9% to 76,210 units in the United States.
However, deliveries to mainland China and Hong Kong declined only 3.2% to 302,512, thanks to the independent production lines in China and the less severe epidemic situations in the two places. The company did not provide a sales breakdown of China and Hong Kong.
On March 17, the Volkswagen Group, which owns Audi, Lamborghini, Porsche and several more luxury car brands, announced a suspension of production at factories across Europe due to the Covid-19 pandemic.
On April 27, the company reopened the world’s biggest car factory at Wolfsburg in Germany after it made changes to its production lines on anti-epidemic purposes.
Korn said Audi’s second-quarter sales performance in Hong Kong was mainly affected by a slowing local economy, which had been seen from last year, rather than the lockdown measures.
“In Europe, the decline was due to the shutdown. In Hong Kong, we were in a relatively better situation. We did not have to close our showrooms,” he said. “Instead, retail businesses in Hong Kong were mainly affected by the slower economy and reduced mobility in town.
“We have a massive economic problem in Hong Kong. There had been a 50% reduction in the number of tourists since the 2019 summer. We haven’t had any tourists since the end of January,” said Korn. “People were not going out … even without local infections, it’s still quiet.”
In January, total visitor arrivals in Hong Kong dropped 52.7% to 3.21 million. The city then closed its borders from February. Between February and July, only 329,000 visitors arrived in Hong Kong, a 99% decline from 33.28 million in the same period of last year, according to the Hong Kong Tourism Board.
Citing public transport data, he said mobility in Hong Kong had decreased significantly in the first half of this year.
According to Hong Kong’s Transport Department, the average daily public transport passenger journeys decreased from the normal level of 13 million to 11 million in the second half of last year, when anti-extradition protests were happening. Between February and April this year, the figure fell to the level of about 7 million.
In July, Audi and Kam Lung Motors opened a flagship showroom, which occupies 15,000 square feet and accommodates up to 18 car displays, in Taikoo Shing mall on Hong Kong Island. On September 25, Audi held a grand launch of the five-meter-high facility.
The new showroom was inspired by the Audi headquarters in Germany from its urban design concept to the highest benchmark of corporate identity, said John Leung, general manager of Audi at Kam Lung Motors, which also set up three service centers across Hong Kong to provide luxurious service and shopping experiences to Audi fans.
“I am proud of Audi for bringing Germany’s automobile technology to Hong Kong,” said Dieter Lamlé, Consul General of the Federal Republic of Germany in Hong Kong. “I am also pleased to know that the brand is joining hands with a local investor for its long-term development – with Hong Kong remaining as a significant market.”
“We are back to normal supply. We are prepared and moving forward to the next step,” said Korn, adding that he was looking forward to seeing the reopening of Hong Kong’s borders, which will bring in tourists and businesses and help boost the local economy.
“Epidemic is slowly easing now, with the opening of the new flagship showroom today, we are confident that sales will be back on track,” he said.
On Friday, Chief Secretary Matthew Cheung said the Hong Kong’s epidemic situation had remained fluctuating, while Guangdong province and Macau had achieved zero infections. He said the cross-border people flow would only be available after Hong Kong’s epidemic was stabilized. Over the past week, a few local infections were recorded per day.