Audi Bucks the Trend, Promises More Product, Not All for U.S.
August 10, 2009
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Hyundai’s U.S. CEO John Krafcik said it best earlier this year: “flat is the new up.” By that measure, Audi AG is riding high. Global sales fell 11 percent in the first half of 2009, versus 18 percent for the whole industry. What’s more, Audi was comparing its number to a record-setting 2008. In North America, sales fell 12 percent in the first half of the year, versus a one-third drop in sales for the industry. More important, Audi is making money. Its global first-half profit was 823 million euro ($1.17 billion), off 36.6 percent. Chief Financial Officer Axel Strotbeck said Friday that the company posted a “clear profit” in both of the first two quarters. “We’re the most profitable premium manufacturer, at the present.”Audi continues its struggle for more premium market share in the U.S., of course. It’s been about 17 years since it nearly left our market. Audi’s still a pretty small player here, only its fourth-largest global market (after Germany, China and Great Britain) whereas we’ve traditionally been the second-largest market for Mercedes-Benz and BMW (though their Chinese sales undoubtedly rival U.S. sales now, too). Nevertheless, Strotbeck said Audi will “not push sales by artificially pushing lease prices down” in the U.S. Instead, it will continue to move upmarket. In terms of features, quality and luxurious interiors, Audi’s reputation is nearly that of BMW and Mercedes. While its A4 and A5 can get very expensive with optional equipment very quickly, the A4 especially strikes many upper-middle-class buyers as an accessible step up from an entry level Lexus, Infiniti or Acura, and perhaps a step-and-a-half up from a loaded Camry or Accord.The other element that’s working for Audi is marketing. While other luxury brands cut marketing and advertising budgets and get out of racing, Audi is a marketing powerhouse that led Super Bowl XLII advertising and spent a truckload of euro to go to Le Mans. It’s setting itself up well for the next decade, when strong marketing will pick the winners in a plethora of good new product. Strotbeck pointed to three new models Audi will introduce in coming months: the A5 Sportback, an all-new A8 coming in calendar 2010 and a new A1 in the third quarter of ’10. Two will not be imported to the U.S. Audi said this about future models/strategy in the North American market:No U.S. production plans for now. This became a big issue for models like the A4 last year when the euro’s value went past the $1.60 mark. Volkswagen is building a plant in Chattanooga, Tennessee, which will build the Passat replacement beginning calendar year ‘1l, but Audi won’t be part of it, for now. No plans to bring the 2011 A1 to North America. Audi hopes to grow A3 sales with a new diesel version coming to the U.S. in December. Problem with the A3 is that it costs nearly as much as a base A4 in the U.S., and despite the Mini’s popularity, we don’t like hatchbacks here. Given the expected technology, the A1 could cost Audi at least as much to build as the A3 or even the A4. Still, if the new A1 is as cool and cutting edge as the original, won’t it be as desirable as a Mini Cooper?While Audi still considers diesels the best green/fuel-efficient technology, it will have a hybrid Q5 on the market in one-and-a-half to two years.All of Audi’s 2010 gas-powered models will have direct injection, and it claims it will be the first to achieve that milestone.
Source : blogs.motortrend.com/6564153/corporate/audi-bucks-the-trend-promises-more-product-not-all-for-us/index.html