Discounting not doing brand justice: Audi

HEAVY discounting has become an expectation in the premium new vehicle market that is ultimately unhealthy for car-makers, according to Audi Australia, which has now placed its focus on reminding buyers of its heritage and value.

Speaking with GoAuto at the launch of the Audi Q2 2.0 TFSI quattro in New South Wales last week, Audi Australia marketing and communications director Anna Burgdorf said that brand building must become a priority to combat the longer term effects of discounting within dealerships.

“I think it’s a good time to be a customer, but do we want to see the brand discounted heavily? No, because we believe it has a much stronger value than that,” she said.

“We genuinely believe we have a brand that is probably stronger than any other brand from an innovation and a technological leadership perspective. I think that’s evidenced in cars like the new A8.

“Perhaps we need to spend a little bit of time reminding the market about the value of the Audi brand and … I guess the heritage and the innovation that has gotten us to where we are today.”

Ms Burgdorf said that it had become an expectation among some premium vehicle buyers to expect discounts not only with Audi, but “for all manufacturers”.

Asked whether it could be a challenge for Audi and its competitors to change that buying behaviour, however, she replied: “Yes, I do.

“Is it a priority (to change that behaviour)? I mean, we’re interested in healthy, sustainable business.

“We want healthy, sustainable volume, and we want a network and a business that’s profitable, because that’s the way we encourage healthy business practices, investment in the brand and continued investment in offering really good customer service.”

Asking dealerships to refrain from discounting was not a measure that would be taken, however, but rather, as previously reported, Audi Australia would this year focus its efforts around enhancing its brand image and buyer loyalty.

“I think the ACCC (Australian Competition and Consumer Commission) has pretty clear guidelines on what we as a manufacturer can do to influence our dealerships,” Ms Burgdorf said.

“They exist in a free market (and) we would hope that they don’t compete with each other. Any business wants to win customers and wants to win sales, but they need to have a healthy business.

“I think our dealer network are a group of incredibly professional, intelligent people and they need to run their businesses in a way that will continue to make them profitable, but also obviously react to customer demands and customer needs.”

Once Audi’s top-seller, the fifth-generation A4 has partially become a casualty in a move away from cheaper pricing, with Ms Burgdorf calling out higher pricing of the new model as a reason for its sales drop, despite being an all-new model.

“The A4’s a really interesting one because the technology, and I think the quality of that vehicle is second to none,” she continued.

“What we’re probably not seeing in the numbers that we’d like to see, is people coming into the showroom and asking about the A4, possibly because it isn’t a vast departure from where it has been in the past.

“Because there’s so much new technology in it, that technology also has a value, and that’s reflected in the list price of the car. It is more expensive than the outgoing model so there is a hesitation probably in buying a new car that perhaps doesn’t look dramatically different to the old model.”

The major upside, Ms Burgdorf explained, is that when people test drive the A4, they were increasingly likely to purchase the vehicle.

“What we do find is that when we get prospective customers into the car, we have a 50 per cent conversion rate (and) that’s incredibly strong,” she said.

Despite being less than two years into its model cycle, having launched locally in February 2016, volume of the A4 sedan and Avant range has fallen by 20.8 per cent year-to-date, according to VFACTS.

Compared with the same time last year, sales are down by 493 to 1876 units, with even Audi’s new Q2 small SUV coming in hot on its heels with 1567 sales – versus none last year.

The A4 has been outsold this year by the A3 (4181), Q5 (2579), Q3 (2518) and Q7 (2286). In the Q3’s case, although its sales have dropped by 20.0 per cent compared with last year, the similarly priced Q2 has more than picked up the shortfall of 628 units.

Although the new A4 – which landed in a declining passenger-car segment – has not fired, the Ingolstadt car-maker will soon also switch to new generations of the A7 Sportback and A8 sedan, with a new A6 still to be globally revealed.

It is these new sedan models, Ms Burgdorf believed, that will aid Audi Australia’s pursuit to better spruik the value of its brand.

“Certainly in that upper end, the A6, the A7, the A8, we see a (sales) contraction (and) that’s pretty across the board,” she said.

“I think what those cars (A6 and A7) herald is again, the next step in technological innovation, and so it is about having the ability to attract a kind of buyer that wants to drive and buy a large passenger car, but really has a genuine love of innovation.

“It’s not an easy segment to crack by any stretch of the imagination. We certainly have strong hopes for the A7. It’s a beautiful, beautiful-looking car (and) I think it absolutely needs a compelling value proposition. Would we like to see more buyers in the A6, A7 and A8 segment? Absolutely.”

The A6, A7 and A8 are in the final year of their lifecycle, and year-to-date sales have shrunk to 272, 73 and 27 units and drops of 37.2 per cent, 45.1 per cent and 44.9 per cent respectively.

Although even the A6’s tally over 10 months of the year is broadly equivalent to the Q7’s sales in a single month, Ms Burgdorf reiterated Audi Australia’s commitment to its sedan range.

“I think for us we try and look at the whole segment rather than individual model lines,” she said.

“If we’re selling more Q7s than we are A6s, our overall – what we would call – C-segment is healthy. That’s okay. Our job is to make sure that our customers buy our cars and stay with our brand. It doesn’t make sense for us to become a brand that only sells SUVs, for example.

“I think importantly for us, we need to offer the cars that customers want to buy for great value, backed by a brand that people want to own and are proud to be part of.”