Audi, SAIC Motor sign deal to weigh jointly making Audi cars in China: source

By By Norihiko ShirouzuFeaturesReuters

Audi AG and China���s SAIC Motor Corp <600104.SS> have signed an agreement that will likely pave the way for the German luxury car maker to produce cars in China with SAIC, a person familiar with the matter told Reuters.

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Executives of Audi and SAIC formally signed the ���cooperation framework agreement��� on Friday, and the German car maker is expected to announce the move on Monday.

The two sides agreed to continue to talk and try to nail down details of a deal for Audi to produce cars in China with SAIC, the person said.

Neither SAIC nor Audi could be reached immediately for comment.

The move, if finalized, would allow Audi, a unit of Volkswagen AG , to significantly expand its ability to produce cars in China, the world���s biggest auto market.

Audi currently produces all its cars in China jointly with FAW Group Corp [SASACJ.UL] in the southern city of Foshan, near Guangzhou, and in the northeastern city of Changchun. Both SAIC and FAW are Volkswagen���s joint venture partners.

Research firm��Bernstein said in a note published on Wednesday that ���the implications of such a move (Audi producing cars in China with SAIC) ��� if realized ��� would be profound.��� It would provide Audi and its parent Volkswagen a way to reap more profit from China, it said.

In Foshan, Audi produces the A3 compact car and its variants, while in Changchun the German luxury brand assembles the long-wheel-base versions of the A4 and A6 sedans, as well as Q3 and Q5 crossover SUV models, among others.

Audi is expected to launch in China a plug-in electric hybrid version of the A6 L, a long-wheel-base version of the A6.

(Reporting By Norihiko Shirouzu; Editing by Muralikumar Anantharaman)