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Audi’s premium stance in culture of deals

Discount: Audi admits it is not above engaging in deals to lure buyers, such as low finance on A4 sedan. But it says it is careful not to damage the brand.

Keeping ‘prestige’ while staying competitive a challenge in cut-throat market: Audi

Audi logo21 May 2013

By MIKE COSTELLO

AUDI Australia’s marketing director says premium car-makers here must maintain a sense of dignity while competing in a fearsomely competitive market where sweeteners are commonplace.

Kevin Goult, who joined the German brand about nine months ago from Jaguar Land Rover, has told GoAuto of the tough balancing act maintaining brand prestige while matching up in the cut-throat Australian market – one of the world’s most competitive.

Australia has a disproportionately high number of car brands on offer in relation to the size of the market – around 50 competing for just shy of 1.1 million sales (excluding heavy commercials).

Most brands naturally aspire to sales growth, often at a level well above the rate of growth of the market as a whole. Audi has a goal of at least 15,000 sales this year, up from 14,535 units last year.

Mr Goult spoke to GoAuto at this week’s launch of the new A3, which as the company’s biggest volume-selling model launch this year is the subject of a significant marketing campaign encompassing mainstream, social and lifestyle media. The media buy is understood to be around $5 million.

“(The local retail space) is ugly, it’s really ugly,” said Mr Goult. “I think this is now where businesses need to define themselves and maintain dignity with prestige, and that’s where I’m intending for Audi.”

The difficulty, he said, is that nearly every brand – including Audi – is offering a deal on their product, whether it be a simple discount or value-adding, or through means such as low interest finance. “It’s ugly, the words that are being thrown around: ‘free’, ‘demo’, ‘sale’, it’s like a fire sale ... including from other premium manufacturers,” he said. “We’re not exempt from it by any means, we need to play in that format, but we need to play wisely.”

Audi is currently offering low-interest finance on its A4 sedan, but Mr Goult said the company would generally look first at tempting its existing owners into a newer model, and campaigning on the back of ‘added-value’ offers rather than discounts or other sweeteners.

Incentives such as cashback offers, low-interest finance and end of financial year deals are not just the province of mainstream brands in Australia, with premium brands also engaging.

“Yes, we will compete in competitive segments in terms of retail focused advertising and offers, but we need to maintain our dignity with customers,” he said.

“If we just go in there and tear up money, what we actually do is de-value our brand, we’ll devalue the car the customer already has, and it just puts us in a weaker position.

“We’ve got to remember, we’re premium. But we’ve got to fight in this really ugly retail space, and it’s difficult because everyone is offering a deal, nobody is doing anything new at the moment, and that’s where we’re being creative at the moment.

“So, for instance, everybody is giving away finance, everybody is doing free rego, CTP, metallic paint and stamp duty – these sorts of things – so we’ve got to come up with a strategy which positions us in a premium retail space, offering high amounts of value to our customers that moving forwards protects their residuals too.

“The worst thing we can do is do a campaign offer: retail, retail, retail, all the way through the year, and by month 12, the customer who bought a car in month one has a residual value that has been hurt so badly, they’re disheartened with Audi. We need to protect from that.”

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