In the mid-1980s, China's demand for cars increased sharply under the reform and opening up policy, and the problem of insufficient domestic car production and single products gradually intensified. As China's earliest automobile production base, FAW finally received instructions from its superiors to re-plan its sedan production. Geng Zhaojie, then director of FAW, understood that China's automobile industry could not build cars behind closed doors. To master the independent intellectual property rights of mid- to high-end cars, it was necessary to introduce and absorb foreign advanced high-end car technology, digest and absorb it through assembly and production, and then revive the national brand.
With this idea in mind, Geng Zhaojie began to contact and inspect some foreign automobile manufacturers, and finally decided to introduce Chrysler engines. In 1987, the Chrysler 488 engine project was signed in the Great Hall of the People.
With Chrysler engines, FAW should have introduced the production technology of Chrysler models, while producing Chrysler models, and at the same time embarked on technology transformation to design new Hongqi models. In fact, FAW did this. In May 1987, a Hongqi sedan based on the Dodge 600 model was already drawn on the drawings.
Almost at the same time, the Volkswagen Group in Germany also received news that FAW was seeking cooperation globally to produce high-end cars. Dr. Hahn, the discerning chairman of Volkswagen, realized that this was an excellent opportunity for Audi to enter China. In September 1987, two senior representatives of Audi came to Changchun to try to cooperate with FAW. After the two returned to China and reported to Hahn, Hahn was deeply impressed. In October of the same year, Dr. Hahn flew to Changchun directly after the Frankfurt Auto Show.
Dr. Hahn’s impression of Changchun at that time was that it was desolate, but he was also excited by the good foundation of the automobile industry here, and the two parties soon entered the substantive stage of negotiations. After learning about the Chrysler 488 engine purchased by FAW, Hahn confirmed that the engine was derived from Audi technology and could be fully adapted to the Audi 100 sedan.
After dispelling his concerns, Geng Zhaojie made a call. On the other end of the phone was Lu Fuyuan, the then FAW chief economist who was negotiating with Chrysler in the United States. At this time, Lu Fuyuan was in difficult negotiations with Chrysler. The other party believed that after China purchased Chrysler engines, it would definitely need to purchase another Dodge 600 model production line, so they raised the price and offered a technology transfer fee of US$17.6 million. After receiving the call, Lu Fuyuan terminated the negotiations, leaving only the Americans who had not yet understood the situation.
A month later, an Audi 100 equipped with a Chrysler 2.2-liter engine appeared in Wolfsburg, Germany. This surprised Lin Ganwei, who was the chief engineer of FAW at the time. After testing, the average speed of the car is 150-160 kilometers per hour, and the maximum speed reaches 205 kilometers per hour. All performances are very good. The efficiency and sincerity of the Germans have been recognized by the Chinese personnel.
At this time, members of the FAW delegation have tended to cooperate with Audi to produce the Audi 100. According to Lin Ganwei's record, the reasons given by the Chinese technical experts are:
First, in terms of products, the Audi 100 is better than the Dodge 600. Among them, the body design of the Audi 100 is one generation ahead of the Dodge 600; the exterior size and interior space of the Audi 100 are larger than that of the Dodge 600, and the ride is comfortable; the Audi 100 has frequently won awards internationally and is more famous than the Dodge 600.
Second, Volkswagen has provided better conditions and is sincere in cooperation.
Third, the Audi 100 and 200 can be produced as series products. The Audi 100 is a mid- to high-end sedan that can be used as an official car for government officials; the Audi 200 is a high-end sedan that can be used as a car for central leaders.
At this time, Chrysler still insisted on charging a high transfer fee for the Dodge production line. The Chinese left in a hurry. After the final decision of the top management, the FAW project will be cooperated with the German Volkswagen. At this time, Americans finally understood that they had to pay the price for their arrogance, and they could only lament: We are too late.
After the two parties confirmed their cooperation, they intensively agreed on a detailed cooperation plan. The two parties agreed that in the early stage, FAW would produce 30,000 units of the Audi 100 model under a license as a "pilot project."
If the two parties continue to sign a long-term project of 150,000 golf cars in 1991, Audi can waive the technology transfer fee of 19 million marks for the Audi 100 model. FAW purchased equipment from the Westmoreland Volkswagen plant in the United States for 10 million marks for the production of the Audi 100 model.
In Geng Zhaojie’s opinion, this is a good deal. This is equivalent to FAW only spending 10 million marks to introduce 30,000 units of the Audi 100 model and at the same time building a production line with a capacity of 150,000 units. What moved Geng Zhaojie most was the training of talents and the introduction of technology for the revival of Hongqi Cars.
For Volkswagen, they also need to complete the great revival of the Audi brand. From the late 1970s to the early 1980s, driven by Piech, Audi developed rapidly at the technical level, and a series of new products emerged at various auto shows and events. In just a few years, the weather-beaten Audi brand finally competed on the same stage with Mercedes-Benz and BMW.
The Audi 100 model introduced to China and produced in China embodies all Audi's scientific and technological achievements. It adopts a streamlined design and is the world's first mass-produced sedan with a drag coefficient of 0.3. Its structure is entirely made of lightweight materials. It was named the "World Car" in 1983 and won a series of world awards. In 1984, the Audi 100 won the title of "World's Best Car of the Year". What Audi needs most right now is to bring its flagship products to the international market and expand the production and sales of Audi 100. In China, Audi found an opportunity.
With the formal signing of the contract between FAW and Volkswagen, under Dr. Hahn’s planning, Volkswagen has become increasingly close to the Chinese market. Dr. Hahn's long-term strategic vision is aimed at the future Chinese market. He knows very well that China, which is reforming and opening up, will undergo earth-shaking changes. This will be the next Brazil and South Africa, and will become the place where Volkswagen takes root.
The arrogant Americans and the humble Germans are in sharp contrast. In the end, the Americans missed an excellent opportunity to enter the Chinese market, while the Germans gained the trust of FAW and not only entered the Chinese market with their products, It also lays out the future for Volkswagen Group’s long-term development in China. This good start between China and Germany has also laid a solid foundation for more in-depth cooperation and development in the future. At the end of 1989, the Audi 100 welding assembly line began debugging. FAW technicians completed the assembly and debugging of the production line under difficult conditions. On April 21, 1989, the Audi 100 sedan assembly line was completed and put into production. Dr. Hahn, chairman of the German Volkswagen Group, made a special trip to cut the ribbon. Dr. Hahn sincerely lamented: "Our cooperation with Tongqi has enabled Volkswagen to have the most powerful partner. Your speed is not a truck, but an Audi 200."
On August 1, 1989, the first Audi 100 sedan rolled off the assembly line. 1,922 Audi 100 sedans were assembled that year, an increase of 116% over the previous year.
It was on this production line that more than 100,000 Audi 100 cars rolled off the production line.
According to the technology transfer agreement signed between FAW and Volkswagen Group in 1988, FAW will produce the Audi 100 under license and CKD assembly for a period of 6 years.
Six years later, in 1995, the 1984 "Global Car of the Year" finally completed its "special mission" in China. FAW immediately changed its leading sedan product from the Audi 100 to the The new generation of Hongqi sedan is named Xiaohongqi in order to distinguish it from the old large Hongqi sedan. It is the first result of foreign high-end car technology transfer since China's reform and opening up.
From the start of construction in 1988, to 1997, FAW *** produced 123,294 Audi 100 and Xiaohongqi sedans based on Audi 100, with localization rates reaching 82 and 93 respectively; sales revenue in 10 years reached 311. billion, realizing profits and taxes of 6.6 billion yuan, equivalent to 10 times the total investment; at the same time, it also paid 7 billion yuan in tariffs for imported parts of Audi 100 CKD, making a huge contribution to the import substitution of mid- to high-end cars and saving money for the country. A large amount of foreign exchange resources were extremely valuable at the time.
After the contract for the introduction of the Audi 100 project expired, a new question faced both China and Germany: whether to continue cooperation? How to cooperate? Should we maintain certain technical cooperation or form a joint venture with China? If it is a joint venture, with whom and how?
Since 1993, the two parties have been negotiating on the joint venture to produce Audi. Needless to say, China’s wishes are undeniable, but Germany has disagreements on this.
At this time, two schools of thought formed regarding the introduction of the Audi 100 successor model. On the one hand, it is believed that the Audi 100 C3 model, which has entered the middle of its life, will be directly and simultaneously introduced into the new generation A6C5 model. However, opponents believe that the A6C5 embodies the world's top automotive technology and manufacturing processes, and FAW does not have sufficient production conditions at this time.
Pi?ch, who has been promoted to chairman of the Volkswagen Group, and Daimer, then president of Audi, broke the stalemate in a breakfast conversation with Geng Zhaojie. Finally, the highest levels of both parties finally reached an agreement, and the project of Audi joining FAW-Volkswagen and producing a new generation of Audi A6C5 began irreversibly.
On November 13, 1995, during the visit of then German Chancellor Kohl to China, FAW, Volkswagen and Audi signed an agreement in Beijing to incorporate Audi cars into FAW-Volkswagen production. contract. One month later, on December 18, the three parties jointly revised the joint venture contract and changed the share ratio structure to: FAW 60, Volkswagen 30, and Audi 10. At the same time, FAW-Volkswagen and Audi signed a "Technology Transfer Agreement", and Audi series products will be officially included in FAW-Volkswagen's production as contract products.
Audi has since become the first international high-end car brand to be jointly produced in China. Different from the Audi 100 produced by FAW through license and technology transfer since 1988, joint venture production means that Audi will be fully involved as a shareholder in the production management, parts procurement, product upgrading, marketing and after-sales service of domestic Audis. links and bear corresponding risks.
From December 1995, when Audi officially joined FAW-Volkswagen, to the end of 1999, when the new generation Audi A6C5 rolled off the assembly line, there were four years in between. For Audi and FAW-Volkswagen, in addition to "conducting the Audi A6 Apart from preparations for lengthening, R&D, production and sales adapted to national conditions, there were no planned Audi products on FAW-Volkswagen's production line. Therefore, the two parties of the joint venture decided that FAW-Volkswagen would first produce the Audi 200 on the same platform as the Audi 100C3.
In January 1996, the FAW-Volkswagen joint venture signed an agreement to "jointly develop" the Audi A6C5. According to the agreement, the development of the extended model for the Chinese market was closely coordinated with the development of the Audi A6 prototype, which was mainly carried out simultaneously at the Audi headquarters in Germany. It lasted three years and involved more than 300 people, including 6 Chinese personnel; the development fee was provided by FAW-Volkswagen pays, and Audi and FAW, as both parties to the joint development, charge a certain percentage of this fee.
However, China and Germany have differences again regarding the localization work of A6 C5. The focus of the conflict is whether the A6C5 should be lengthened. Based on a deep understanding and respect for the particularity of China's high-end car market and user needs, at that time, FAW clearly stated that the domestically produced Audi A6 must be "lengthened", the wheelbase must be lengthened, and the entire vehicle must also be lengthened, because Chinese users of this level of cars must Special emphasis is placed on rear space. But Audi believes that the Audi A6 is the only executive-level high-end car of the Volkswagen Group, and the rear space is sufficient. Why does it have to be "extended"?
In the end, FAW convinced the Germans. The lengthening development work basically followed the process of a new project and lasted three years. Nearly all work is done to minimize the negative impact the lengthening may have on the vehicle's performance and appearance.
On September 6, 1999, the Audi A6 C5 officially rolled off the assembly line at FAW-Volkswagen in Changchun. Its wheelbase is 90 mm longer than the global version, and the overall vehicle length has also increased by about 100 mm, reaching 4886 mm. By the time it was delisted in April 2005, this car had sold more than 200,000 units in more than five years and achieved great market success.
The extra money invested in the extension paid off handsomely.