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New-model blitz edges Audi closer to domination

New baby: Audi's A1 - seen here in concept guise - will drive Audi sales higher when it takes on BMW's Mini.

More new products where Q5 came from, says a relentless Audi

17 Mar 2009

AUDI’S quest to topple German arch-rivals BMW and Mercedes-Benz as Australia’s, and the world’s, favourite luxury brand took a giant leap forward last year, in a trend that should continue as it enters four unchartered vehicle segments by 2011.

Volkswagen’s premium brand notched up its healthiest profit ever by selling more than one million sales worldwide for the first time last year, posting its 13th consecutive sales record while most of its rivals were well down.

Australia was the world’s fastest growing market for Audi in 2008. Audi Australia’s volume growth out-performed the Middle East (+21.2 per cent), China (+17.3 per cent), Denmark (+15.2) and Portugal (+14.8), as well as the brand’s average global growth rate of 4.1 per cent.

Audi’s 2008 local sales tally of 9410 vehicles was 30.2 per cent up on 2007 figures, and more than double its result in 2004, when Audi Australia came under factory control. Last year it streaked further away from Lexus (down 18.6 per cent with 6670 sales) and continued to erode the sales lead of BMW (0.4 per cent up at 17,263) and Mercedes (8.4 per cent down at 18,540).

Audi continues to be Australia’s fastest growing automotive brand in 2009. After two record months, Audi sales are up 5.4 per cent in a market down 18.5 per cent, while all of its rivals are down more than 20 per cent.

However, even bullish Audi Australia managing director Joerg Hofmann admits to being surprised when his company outsold both BMW and Mercedes-Benz locally for the first time ever in January.

Mr Hofmann admits the market will be tougher this year, but is adamant Audi’s share of the luxury car market will continue to increase, even if its sales don’t.

“The plan for 2009 is to increase market share,” he said. “We’re in a unique position in the market. We are 100 per cent certain we will grow.

“If the market continues to decline it gets a bit tough, but if everyone’s going backwards we should still grow – and maybe we can even increase sales.”

 center image From top: Audi Sportback concept Detroit 2009, Q5, A5 Cabrio, TT RS.

Mr Hofmann said additional new models were the key to Audi’s continued sales growth, both globally and in Australia, and that policy would not change in the face of the global automotive sales slowdown.

He said the arrival this month of the mid-sized Q5 SUV, next year’s all-new A1 mini-car and the four-door A7 Coupe due in 2011 (and presumably the same year’s Q3 mini-SUV, which is yet to be officially confirmed), would be key planks in Audi’s “Route 15” global business strategy, which aims for 1.5 million sales globally by 2015.

Locally, the ambitious Audi plan calls for 15,000 sales by 2015, when Audi’s national dealer network will grow from 31 to 40 dealers, but Mr Hofmann goes further by saying Audi could overtake both BMW and Benz as early as 2012.

“Our rivals have a 30 or 40-year headstart on us. It might take us three or four years before we’re consistently number one.” The Q5 goes on sale almost three months ahead of schedule as Audi’s first direct competitor for the BMW X3, while the 2010 A1 will aim straight at BMW’s Mini model family and the A7 will vie with the Mercedes-Benz CLS.

“Q5, A1 and A7 will be on top,” said Mr Hofmann at last week’s Q5 launch.

“Investment in product will not change. We certainly won’t cancel products. I’ve just returned from a product conference and it is clear there are more products to come.

“Product is what we sell – without products we are in trouble. Some of our rivals are in trouble because they don’t have new products to develop. Some brands are already at product saturation point.

“Audi firmly believes that growth in the future will come from niche models and we intend to increase our model range from 25 to 40 models by 2015. Compared with our competition, we still have a number of new niches to fill and therefore new sales opportunities.” Due to emerge in final production guise at the Frankfurt motor show in September, the all-new A1 will take direct aim at Mini when it enters production in Europe late this year. Mr Hofmann confirmed it will be sold in Australia as a niche model below Audi’s current entry-level model, the A3.

“There will be a car below the A3. It’s no secret anymore there will be an A1 and it will come sooner rather than later. Certainly, we'll get it here that’s clear. If we could get it here by the end of 2010 we would be happy.” Mr Hofmann said the A1 was close to “design freeze” and would be positioned at a younger audience than the Mercedes A-class, but would not have the benefit of being marketed under a different brand like BMW’s Mini.

“It will be positioned against Mini. We are still developing the marketing concept. In another half year we will lock in the price. It has to be positioned right. It’s young, trendy, fresh – almost a separate brand.

“If you call it a smaller A3 then it won’t work – we have to work on this because we’re not using a different brand like Mini that BMW is using. I’ve heard a few strategies but nothing is locked in yet. A-class is very different. It has to be something really special to step up into the Audi brand.” Mr Hofmann scotched suggestions the A1 could eventually prove more popular than the A3 or even Audi’s volume-selling A4.

“The pillar of our brand will always be the C or D segment. They would cut production before we went the VW direction. We have to be profitable. If you rely on high-volume, low-margin cars you won’t make money. A1 will always be niche.” He said that while Audi remained focussed on diesel power as its primary CO2-reduction strategy, hybrid and electric vehicles were also being developed, raising the prospect that the A1 could also become Audi’s electric technology ‘vehicle’.

“There will be a few surprises regarding electric cars. We are advancing in that area too and it will come sooner rather than later.

“Australia is still a country you can drive in, so hybrid doesn’t make sense here. Our focus is diesel and our engineers say there is still so much improvement to come (from internal combustion engines) in terms of improved efficiencies.

“Hybrids are still expensive to make. We all know Toyota still hasn’t made money with Prius. Hybrid is still a marketing exercise but we still have to answer our customers so we will develop one in future.

“This is why only the big companies will survive – all these different technologies cost money and small companies won’t be able to compete.” Still, Mr Hofmann said Audi’s ‘clean diesel’ Q7 3.0 TDI could not be sold here until Australia’s diesel fuel regulations were tightened, but the Audi Australia boss couldn’t not disguise his excitement for the A7 when asked if it would be sold here.

“I can't comment. We still have to wait at least two year,” he said, adding: “This one, as an Audi guy, is just beautiful. The A7 will be a real success. I saw it again two months ago and this is my favourite because it looks stunning – a sporty-looking coupe with four doors.” As the latest example of Audi’s desire to further develop the five-door Sportback theme it pioneered with the A3 in 2004, the A7 will be based on the Audi Sportback concept revealed at the Detroit motor show in January, three months after the ‘A1 Sportback concept study’ emerged at the 2008 Paris motor show last October.

Mr Hofmann said Audi’s A2 model name could be revived due to a belief the alloy-bodied compact hatch was ahead of its time in 2005. “A2 may be reconsidered again. I believe the A2 now would have been a different story than it was four years ago, he said.

But he remained guarded about the spectre of a Q3-badged SUV, which would be based on either the A3 or Volkswagen’s Tiguan to position below the Q5.

“It makes sense that if you have a Q7 and a Q5 ...” he said, before adding: “Q3 is not officially confirmed but the concept makes sense.” In the meantime, Audi will add a bevy of new model variants to take advantage of the under-7.0L/100km ‘green’ vehicle exemption within the federal government’s luxury care tax (LCT). In all, Audi says it will offer an unrivalled 17 models that will be either LCT reduced or exempt.

LCT-free Audis will include the A6 2.0 TDI Multitronic, which will become the new entry-level A6 variant from May, plus the same month’s A4 Avant 2.7 TDI and the A4 Avant 2.0 TDI due in September, while the A6 2.7 TDI (also due in May) will be LCT-reduced.

“We fought the LCT and now we have introduced a new range of models to meet it,” said Mr Hofmann.

Mid-year will also see Audi introduce the world’s first diesel-engined sportscar in the form of the TT 2.0 TDI, which arrives alongside what will be the TT line-up’s new price leader in the form of the TT 1.8 TFSI.

While Audi says it will continue to plug market gaps in which it is yet to compete, Mr Hofmann admits that – just as the A4 Allroad will not be imported because it is too similar in concept to the Q5 – the latter will attract substitutional sales for both the A4 Avant and Q7.

“Q7 is a different customer to Q5, but if there is any it will be with A4 Avant,” he said. “But that volume is already small. If it shrank to a level where it wasn’t worth selling then we wouldn’t sell it. But the B8 is doing very well and I don’t expect that will happen.” Mr Hofmann admitted that a “maximum” of 10 per cent of Q7 sales volume could be affected by the Q5, with the seven-seat version accounting for 80 per cent of Q7 sales before Audi Australia made a third-row standard in its large SUV.

He said he was “fighting daily” to increase Australia’s allocation of the Q5, which would be limited to about 1000 in 2009.

Given unlimited Q5 supplies, Audi’s mid-sized SUV would outsell the X3 with between 1400 and 1500 annual sales, but that no Q5 rival would be forthcoming from Mercedes.

“There is no competitor coming from Mercedes. The GLK is stuck somewhere in Germany and may arrive as a 2WD,” he said.

“The biggest problem with Q5 is getting enough production. Global demand is what will limit us but it will still be a 1000-unit growth opportunity “We got Q5 almost three months earlier than expected and we’ve already got a few more than expected. I’m fighting almost daily to get more production and we will get a few more.

“Q5 is for people without kids. If there’s one segment that should grow it’s the Q5. Aussies love SUVs and it’s a good price,” he said.

What’s coming from Audi:
Q5 2.0 TFSI and 3.0 TDI March
Q5 3.2 FSI and 2.0 TDI April
A6 2.0 TDI May
A6 2.7 TDI May
TT 1.8 TFSI Mid-2009
TT 2.0 TDI Mid-2009
A4 Avant 2.0 TDI September
A5/S5 Convertible Late 2009
R8 V10 Late 2009
S4 Early 2010
TT RS Early 2010
A1 Late 2010
A7 2011
A8 2011
Q3 2011
A3 2012
A6 2012

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