Audi's Big Gamble
It's been around 20 years since 60 Minutes destroyed Audi in the U.S. by blaming its cars for injuries and deaths caused by a "sudden acceleration" problem. I don't think it was ever proven that the cars actually had an identifiable defect; but it did cause Audi and the rest of the car industry to install a lock-out system on all automatic transmission cars that require you to have your foot on the brake before you can shift the car out of Park. Audi has been slowly rebuilding its image in the U.S. ever since.
To understand Audi, it's important to look at its heritage. In 1932, four German automotive pioneers, Audi, Horch, DKW and Wanderer, merged to become Auto Union AG. The corporate symbol became four interlocking rings to symbolize the four companies now one. Auto Union was formed just at the beginning of the rise of the Nazi party in Germany. During the few years before the second World War, Auto Union produced stunningly beautiful, futuristic, powerful Grand Prix race cars designed by Dr. Ferdinand Porsche. These cars brought much glory and national pride to Germany at a time when such accomplishments were used to boost the Nazi party.
After the war, Auto Union was nearly dead. Gone were the glory days and the once-proud German automotive marques. In 1964, Volkswagen AG purchased Auto Union. In 1969, VW acquired NSU Motorenwerke AG and renamed the group Audi NSU. It wasn't until 1985 that Audi NSU was reorganized and renamed Audi AG.
To U.S. customers, Audi is the newest German brand to arrive on our shores. Audi was on a major push into the U.S. market with its futuristic and advanced 5000 model when its U.S. future was thrown into serious doubt with the 60 Minutes report. It's been a long climb out of the darkness, but the memory of that report is finally fading. The first big step was for Audi to streamline its model range with the introduction of the first generation A4 several years ago. We now have a much clearer market delineation of the lineup with the A4, A6, A8 and TT model lines.
Audi didn't suffer the setback in Europe as it did in the US. Germans remember the glory days of Auto Union and the Silver Arrow Grand Prix racing cars. The four rings of Auto Union (and now Audi) are very meaningful and emotional. In the U.S., you'd be hard pressed to find anyone, including Audi owners, who know what the four rings stand for or that the model designation TT means. [TT stands for Tourist Trophy, a legendary European motorsports event.] The point here is that there is something lost in translation between the German/European understanding of the Audi brand and the U.S. perception.
For example, about a year ago, I was reading an article in some car magazine about an Audi product. What caught my eye was the picture of the driver's instrument cluster with center computer readouts. The display read "Auto Union Ingolstadt". These pictures were taken in Germany and Audi is based in Ingolstadt, Germany. The Audi engineers and many of the German people still think of Audi as Auto Union. It's ingrained into the minds and culture of the Germans. There is no such admiration and context like this in the US, so maybe that's one reason why Audi has struggled so hard to compete with BMW and Mercedes-Benz in the US market.
Beginning this fall, Audi will introduce an all-new A6. It marks the end of the bland corporate grille and styling direction. Perhaps it took BMW's bold styling direction to wake up Audi stylists; but this large, very distinctive front grille will make a very bold statement: You are looking at an Audi and nothing else. The new grille is a direct link to the pre-war Auto Union Silver Arrow racing machines. Audi hopes that the A6 will be an anchor for its plans for increased sales and profitability. At the same time later this year, the A8 also will get the new corporate face. I mention this only because the all-new A8 was introduced last year with much fanfare, but not-so-great sales. The flagship A8 will get a major facelift in its second year, something very unusual in high-end large luxury sedan segment. But I think Audi wanted to make sure that a buyer didn't have to choose the A6 over the A8 just because of the new styling.
For many years now, VW and Audi have had the best interiors in the industry. Last year, the A8 was the new benchmark for all other luxury sedans. I've seen, sat in and played with the A8's interior on several occasions and it never fails to look and feel like real luxury. It puts the Mercedes-Benz S-Class to shame and the BMW 7 struggles to stay up to the level of the A8. The materials, high grade plastics, wood, instrumentation and controls are arguably the best in the industry. The only better interiors come on the new Bentley C-GT (also a VW group product) or perhaps on the new Rolls-Royce P1 (a BMW group product).
The European car magazines have been covering the new A6 and Audi corporate styling direction for many months. Audi has put out some stunning concept cars during the past Auto Show season, and some of those are likely to make it to market. Audi engineers have been busy with the tuner models of the entire Audi line as well. We have S variants of the entire model range with RS versions on the way. Audi was first to market with its dual clutch, Direct Shift Gearbox (DSG) in the new TT V6. DSG has found its way into many other Audi and other VW group products in Europe already. Audi's V8 was borrowed by VW for use in the new Phaeton. Audi is in its second generation of aluminum bodied flagship cars and has been a pioneer for years in the use of aluminum and other exotic materials to reduce weight. Audi has also been using its Quattro all-wheel drive system in its production cars for twenty-odd years, with years of rally experience and endurance tests to its credentials.
So far, none of the heritage or technology has made much of a dent in the U.S. market for Audi, but I think the tides may be turning. LA is a very strong market for Audi. But LA is also a very image conscious market. It's tough to be teased in the parking lot for not having a BMW or Mercedes. As with any bold styling change, there may be some naysayers, but the key is to be distinctive. I think Audi has a winner with the New A6. Many people, mostly the automotive press, still hate the BMW 7, but sales are strong and consumers like it.
So far, Audi has lacked a strong brand image. It's hard to get people to remember the product when people don't recognize the brand from all angles. Porsche, BMW and Mercedes-Benz are all instantly recognizable. Now Audi has taken the next big step into bold design for its sedans. It worked well for Audi last time when it introduced the TT several years ago. The styling of the TT was polarizing, but there were certainly enough people who fell in love with the design to make it a hit. However, the TT is a small volume niche car, not the kind of car that pays the bulk of the bills.
The new A6 takes aim directly at the BMW 5-Series and Mercedes E-Class. This time, Audi is firing on all cylinders. It's not just technology, first quality cabins and Quattro; it's the whole package, including the styling. The pictures speak volumes because most cars end up looking better in the flesh and it looks pretty damn good in pictures!
These cars are the bread and butter for their respective companies and the stakes are high. I can see elements of BMW style and the classic lines of the Mercedes. However, what I see for the first time is a car that is instantly recognizable as an Audi. The atmosphere inside the cabin looks to be every bit as good as the A8 and that is a good place to be. However, it remains to be seen if the front drive or Quattro will sway luxury buyers familiar with rear drive dynamics and a good turning radius. It's not likely that the US market will ever understand the long history of Auto Union. The War nearly destroyed Auto Union and since the Audi name is relatively new to the US market, there is only so much Audi can do to "fix" the problem. The A6 looks like a very good contender; but the jury is out as to whether buyers in the $50,000 luxury sedan segment will give up their BMW keys (BMW is the stated target of Audi).
Both Mercedes and BMW have moved to offer all wheel drive versions of popular models. Mercedes offers 4-Matic as an option on most C and E-Class cars as well as the popular but very aged M-Class SUV. BMW offers both the X3 and X5 SUVs as well as the x option on its 3-series sedans and wagons. I bet that if the A6 is a success, we will see an x option on the 5-Series sedan and wagons here in the U.S.
If Audi can get customers into the showrooms to look at its cars before they make a buying decision, Audi may have a chance. We will report more on the new A6 when it arrives this fall.
