Germans at war
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Rivals: BMW's Guenther Seemann and his Audi counterpart Joerg Hofmann.
Audi makes no apology for gate-crashing an indignant BMW’s luxury car party
By MARTON PETTENDY
19 June 2007
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AUDI has hit back at BMW’s claim it is not a luxury car rival because Volkswagen’s premium vehicle division does not produce rear-wheel drive cars and that it has inflated its Australian sales and market share by discounting.
Managing director Joerg Hofmann used last week’s launch of the new S3 and TT Roadster to emphasise the fact Audi was easily the nation’s fastest-growing premium brand and to suggest BMW was already discounting its freshly redesigned, volume-selling 3 Series.
It is the latest salvo in a war of words between Mr Hofmann and his opposite number at BMW, new Australian chief Guenther Seemann – who refused to acknowledge Audi as a premium car-maker in an interview with GoAuto, as reported in the last edition of GoAutoNews.
The interview was held after a function to announce upgrades across BMW’s entire passenger model range, including the 3 Series.
"Every manufacturer is reacting to us in different ways – smarter and less smart ways," said Mr Hofmann.
"We are confident and proud of what we are doing. We are relaxed because we know we have a great future ahead of us. But we are never ever arrogant. If you ask ‘what is the difference between Audi and some other brands?’- this is a big difference.
"People discount and they are open discounts. I think it’s a quite strong message... if somebody puts a big amount of dollars behind an almost brand-new volume model, a car which was launched a year ago and is now already supported by big thousands amounts of dollars," he said in reference to BMW’s 3 Series range last week.
Mr Hofmann said Audi dealer profitability had increased from 0.8 per cent to 3.0 per cent in the past three years – "which for a retail business in Australia is an exceptionally high number and is by far much higher than most of our competitors’ returns on sales numbers.
“For us it is very important that we don’t do discounting. It’s very important that the customer can believe in a brand, can trust a brand," he said.
Fresh from a strategy meeting at the Ingolstadt HQ of Audi AG, which three months ago increased its 2015 sales target from 1.4 to 1.5 million vehicles in a bid to become the world’s top-selling premium car brand, Mr Hofmann yesterday attempted to put the brakes on the simmering rivalry in Australia’s lucrative luxury car sector, which has not grown as fast as the overall new-car market boom in recent years.
 Left: GoAutoNews back issues from June 13 and May 2 2007.
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"I don’t want to make a story and actually I don’t care too much for what has been said," he told GoAuto. "e are extremely happy with the exceptional performance our brand is showing and we are very confident that we go ahead to another record year for Audi – that’s what I’m talking about and I’m not talking too much about competition.
"I don’t want to comment about specific companies. (But) whatever we communicate is based on fact and the fact is that Audi is by far the fastest growing premium brand in Australia," he said.
Audi has recorded an outstanding 41 per cent growth in sales in the first five months of this year – 10 times more than BMW’s 4.1 per cent increase, which of course comes off a sales base that is about double that of Audi. Just ahead of Audi for vehicle sales, Lexus has also robbed market share from BMW this year and its 16 per cent up on its 2006 sales.
Mr Hofmann fired back at BMW’s assertion that premium vehicles must be rear-wheel drive. "For me, a premium product has nothing to do with the drivetrain. I think it’s even boring for the customer if you offer only one drivetrain.
"As you know, Audi is offering front-wheel drive, quattro four-wheel drive and, with the new R8, we have even mid-engines, so I think we are offering the right variety of products to the customer – and not only one drivetrain. But I cannot see at all a link between the drivetrain and premium.
"There are always pros and cons for drivetrains and (in) certain areas of Europe and also here in Australia where there’s snow, for example, people go for quattro and would never buy a rear-drive because it has certain disadvantages under certain circumstances.
"So I guess you have to buy the product that suits your environment and your circumstances and this is why we at Audi are offering everything from front-drive to quattro to mid-engine."
Mr Hofmann said innovation was more important to luxury car buyers than which wheels drove them, and pointed to Audi technology like quattro AWD, which accounts for 30 per cent of Audi sales globally, the A8’s aluminium spaceframe, the MMI multimedia system and Audi’s direct-injection petrol FSI and turbo-diesel TDI engines.
"Premium is innovation and as you know Audi is doing a lot of innovations. Premium is also about design, and you will agree with us that our cars have exceptionally beautiful designs, and it’s about quality and Audi’s build quality is definitely premium and setting standards. Premium is nothing to do with drivetrain – it has to do with innovation, design and quality," he said.
Audi hopes to sell up to 7000 vehicles in Australia this year, while BMW has also targeted a new record (of 16,800) to maintain its lead over Mercedes-Benz in Australian luxury passenger car sales. In the mid-term, BMW has forecast 20,000 sales in 2011 – which would equate to a 25 per cent increase on 2006’s record 16,034 – less than the 31 per cent increase it achieved over the past five years.
By adding the same 1000 sales to its bottom line as it has done every year since Audi Australia became a wholly owned subsidiary of Audi AG in 2004, Audi plans to sell 10,000 vehicles here by around 2010 and then, if it is to play its part in achieving 1.5 million sales globally by the middle of next decade, 15,000 by 2015.
Of course, BMW doesn’t plan on handing its premium crown over easily, and has forecast 1.6 million sales by 2012.
Mr Hofmann, who added that a massive dealer network upgrade was underway following bottlenecks due to increased demand for new models, stopped short of predicting Audi could overtake BMW as Australia’s most popular luxury car brand.
"I don’t know whether I believe whether we could be the number one brand. We are the leading premium brand in many major markets in Europe – we have been ahead of competition on Germany for a while. There are other markets, like Australia, where I admit we have to catch up.
"We started late here in Australia – that’s maybe our biggest weakness – but now we are running faster and faster, so we are a late comer but believe me we are ambitious, we have great stuff in the pipeline and we definitely will catch up," he said.
Read more:
Audi no threat
Audi Q-car on cue
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