SHANGHAI -- Not long ago, a black stretch version of the Audi A6 was the unofficial ride of choice for Chinese government bureaucrats.
Even today, rows of the cars are visible outside Shanghai's municipal training school, where the officials receive instruction and attend meetings.
Last year, China's government directed its officials to buy domestic limos rather than foreign sedans, such as those from Audi, Mercedes-Benz or BMW.
As a result, Audi's fleet sales in China are less than 10 percent of total sales, down from 20 percent a few years ago, said Audi sales chief Luca de Meo. "We were honored to be the official supplier" of government limos, de Meo joked during an interview at the Shanghai auto show. "If there would be any opportunity, we could continue to serve the government here."
In truth, Audi is prospering in China without all that government business. In the first quarter, sales jumped 14 percent to 102,810 units, enough to maintain a comfortable lead over rivals BMW, whose first-quarter sales in China rose 8 percent to 86,224 units, and Mercedes-Benz, whose China sales fell 12 percent to 45,440 units in the quarter.
Audi is fueling its growth with a range of less pricey compact crossovers and
sedans -- such as the A3 sedan introduced this month in Shanghai -- to expand its appeal to retail customers.
The long-wheelbase A6 is a mainstay for China's corporate fleets, and many are chauffer-driven. "But if you talk about the A3, Q3 and Q5, normal consumers drive these cars," de Meo says.
More retail owners of luxury cars drive their own vehicles, so automakers give more attention to driving performance, cockpit design and front-seat amenities.
"We need to serve different customers," said Kevin Chen, general director of Shanghai General Motors' Cadillac division. "It used to be that 70 percent [of the luxury car owners] sat in the back. Now it's reversed."
Chinese luxury-car buyers are getting younger, Chen said. In China, the typical Cadillac buyer is in his 30s -- a couple of decades younger than the typical Cadillac customer in the United States.
To appeal to young Chinese customers, luxury brands are rushing to introduce crossovers. Global introductions of crossover concepts at last month's Shanghai auto show included the Mercedes GLA, BMW X4 and Citroen Wild Rubis.
Cadillac, which sold 30,000 units in 2012, expects continued growth this year on the strength of its newly introduced XTS flagship sedan.
Does Cadillac need a compact crossover to match the lineups of its rivals in China? "Everybody is trying to expand their portfolios, and they are aiming at younger buyers," Chen said. "It's on our radar screen."