Audi's lettermark brand put to the test in China

Audi AG's new China-only sub-brand, which drops its famous four rings in favor of a "lettermark" badge, is drawing both praise and skepticism after opening pre-sales of its first model last week.

The starting price of 235,900 yuan ($33,026) positions the electric crossover E5 Sportback directly against models from Chinese carmakers such as Nio and Geely-backed Zeekr, as well as Tesla.

Analysts say the German carmaker is making a deliberate play for volume in a segment dominated by China's EV startups.

The lettermark brand — simply called AUDI — is the company's latest attempt to regain ground in a market where its sales have slowed and local competitors are setting the pace in smart EV technology.

The rollout has been rapid: the marque was unveiled with SAIC in November 2024, and the E5 Sportback was shown to the public in April this year.

The urgency is understandable. Audi's sales in China — its most important market — have been falling. Deliveries last year totaled 649,400 vehicles, an 11 percent year-on-year decline, with FAW-Audi accounting for 611,088 units and SAIC Audi contributing 43,220 units.

The slowdown in China dragged down Audi's global revenue to 64.5 billion euros ($70.3 billion) in 2024, from 69.9 billion euros in 2023, while operating margins shrank from 9 percent to 6 percent. In the first half of 2025, margins slipped further to 3.3 percent as tariffs, restructuring costs, and weak European demand weighed on results.

Some observers view the E5's launch as part of a broader transformation by global luxury brands in China — what local analysts call a "bottom-up reconstruction". By leveraging local platforms and adjusting pricing strategies, Audi is positioning itself closer to consumer expectations in the world's most competitive EV market.

But the strategy has also caused confusion. Because the E5 does not carry the four-ring badge, some consumers have questioned whether it "still counts as an Audi". Reviews in Chinese media noted that its design language — inside and out — departs significantly from traditional Audi cues. Critics argue the model lacks the "Audi feel", producing a sense of estrangement among long-time customers.

"The four rings are Audi's strongest asset in China, as in other parts of the world, and withholding them creates confusion," said a Shanghai-based auto analyst. "There's a risk of alienating loyal buyers while failing to convince younger ones that this is truly premium."

Others warn of brand dilution and point to Audi's reliance on a partner whose own premium EV brand, IM Motors, has struggled. SAIC is now pinning its hopes on a new venture with Huawei, though its former chairman described the move as "soul-selling".

Still, Audi has little choice but to experiment. Parent company Volkswagen AG has been overtaken by BYD as China's top-selling carmaker, and Germany's premium trio are all under pressure from faster-moving local rivals.

By creating a new brand identity and lowering entry prices, Audi is signaling that it is willing to move faster, even at the risk of diluting tradition.

For now, the lettermark strategy gives Audi breathing room. The E5 Sportback will test whether the combination of a premium nameplate, local technology, and aggressive pricing can cut through a market saturated with options.

If it works, Audi could reposition itself as the most adaptive of Germany's luxury carmakers. If not, it risks reinforcing perceptions of decline — while fueling debate over what still counts as an Audi in China.