Audi's China sales topped those of Mercedes-Benz last month for the first time this year as they increased 3.8 percent to 53,191 while Mercedes registrations rose 8.3 percent to 52,616.
The growth in Audi demand was led by the locally built stretched A4 sedan whose deliveries surged 33 percent from a year earlier to 13,985 last month.
BMW brand sales rose 8.3 percent to 44,135 in the same period.
In the first seven months, Audi still trailed Mercedes: Audi registrations jumped 17 percent to 359,781 while Mercedes sales advanced 15 percent to 392,780. BMW brand rose 4 percent to 330,671.
Audi remained the best-selling luxury brand in China last year.
Audi is poised to benefit more than its two leading German rivals, Mercedes and BMW, from lower tariffs the Chinese government implemented on imported vehicles in July.
The government slashed custom duties on imported vehicles to 15 percent from 25 percent.
On July 6, in retaliation for the Trump administration’s tariffs on a wide range of Chinese goods, Beijing raised tariffs on U.S.-made goods, including light vehicles, by 25 percentage points to 40 percent.
Mercedes and BMW now find themselves in the crossfire of the ongoing trade war between China and the U.S. because both automakers import crossovers and SUVs to China from U.S. plants.
Mercedes exports the GLE and GLS models to China from its Alabama plant while BMW ships the X5 and X6 to China from a factory in South Carolina.
By contrast, Audi does not import vehicles to China from the U.S.
Automotive News Europe contributed to this report