Audi's Future Fortunes
If there is a silver lining in Porsche's takeover of Volkswagen AG, it's that Audi will get more attention, funding and engineering expertise sharing. Audi's fortunes are definitely on the rise.
If you are a regular reader of my rants, you know that Audi is the spiritual successor to Auto Union -- the Nazi-era car company that dazzled the European racing circuits with the stunning Silver Arrow racers designed by Ferdinand Porsche.
The modern-day Porsche/Piëch family dynasty that owns Porsche believes that VW is their personal legacy as the original VW Beetle, with its rear engine, air-cooled design was the savior of the German economy after the end of the Second World War. They also believe that Audi (still called Auto Union by some die-hard engineers in Inglostadt) is also their personal legacy to be used, once again, to showcase the superiority of German engineering.
Audi has big ambitions in the US. If you live in Los Angeles, you will know that Audi has made significant inroads among premium car buyers. You see the Audi vehicles everywhere in LA. Sales of Audi's excellent premium flagship A8 sedan are down significantly in 2007 as the A8 nears the end of its current lifecycle. However, you wouldn't know that living here. The A8 appears to hold its own against extremely strong sales of the new Mercedes-Benz S-Class sedan and the aging BMW 7-Series sedan.
In 2006, Audi sold just fewer than 100,000 vehicles in the US. Audi wants to double that number in the next eight years. Audi's worldwide sales are up 9.4% for the first four months of 2007; however Audi's US sales increased by a whopping 15.2%, a major coup in a struggling US market. And the major reason for those nice US sales increases are due to stunningly strong sales for the very large Q7 SUV. Four month sales of the Q7, 7,355 units, is nearly equal the combined sales of the A3, A6, A8 and TT -- 7,851 units.
I see the Q7 everywhere these days. And it's no surprise why. The Q7 is a fresh design compared to its sisters, the Porsche Cayenne and the VW Touareg. It's bigger, has more seating capacity and a very fair price tag. Q7 sales really took off in early 2007 when Audi introduced the 3.6 liter V6 engine to the range. The thirst for these big SUVs still baffles me as I rarely see more than two passengers in any Q7. But you can't argue with the stunning sales success and the fact that the Q7 became a common site on LA streets almost as soon as it was introduced.
According to the marketing cynics of Madison Avenue, the most important thing a car company can do is branding. And brainwashing, through massive, consistent, multi-platform, multimedia is best way to define and strengthen a brand. They want you to spend lots of money "branding" and they are the ones who know how to do it.
Look what a good job Toyota does with its hybrid synergy drive branding. Toyota is seen as the world leader in "green" automotive engineering -whether that is fact of fiction. Honda is doing the same thing with its entire US fleet. Honda says that it has the most fuel efficient fleet of vehicles in the US market.
On the German side of things, Mercedes-Benz used to be the clearest and strongest brand in the "good old days" when Mercedes cars really were "engineered like no other car in the world". Now, BMW takes the German crown with its "ultimate driving machine" mantra that is repeated in its advertising as well as engrained in its corporate culture.
Audi wants to do the same thing here in the US.
This week, Audi kicks off a new advertising campaign aimed at defining its brand in the US market. Audi ditches the "Never Follow" tagline for "Truth in Engineering". Audi will show how its engineering results in a better driving experience when it comes to safety, quality and performance. Yawn.
Poor "faceless" Audi. I'm sure Audi USA is paying lots of money for this branding campaign. I still think it's wrong. I like Audi. I leased an A6 for two years and found it to be an excellent car in all respects. However, "Truth in Engineering" isn't the kind of exciting tagline the brand needs.
The European/German perception of an Audi is quite different. Audi enjoys an excellent reputation as a sophisticated luxury sedan. It's brand is clear to European customers as Audi has clear roots to the great grand touring racing dating back to pre-war Europe. And the Porsche/Audi tie is clear. Auto Union remains one of the great marques in automotive history. In fact, it's been rumored that VW reorganize with the holding company renamed Auto Union with the VW and Audi brands on equal tiers as sister companies, not the current parent/subsidiary relationship that exists between VW and Audi.
So why is Audi so afraid to explain its four ring logo to US customers? I'm willing to bet that nine out of ten Audi customers can't explain what the logo means. Yet, that logo is a big f***ing deal in Germany. It represents the union of four great German marques: Horsch, Audi, DKW and Wanderer. Audi is the successor to Auto Union. And people know it.
Most German brands "skip" their involvement with the Nazi regime. It's true that Hitler favored Auto Union when it came to racing as it was Hitler who commissioned Dr. Ferdinand Porsche to build the Silver Arrow racing cars that won races all over Europe.
It's also true that Hitler commissioned the same Dr. Porsche to engineer and build the "peoples' car" -- the Volkswagen. Volkswagen's resurrection from the ashes of its bombed-out factory was a major economic engine in post-war Germany. Volkswagen doesn't shy away from its humble roots as the peoples' car as evidenced by the superiority of the Golf and Golf's dominance in Europe as the largest-selling nameplate for decades.
It's also clear that Hitler preferred Mercedes-Benz over all other makes when it came to his personal vehicles Any film footage of Hitler, whether in a motorcade, a parade or at his personal retreat show him in large, gorgeous Mercedes-Benz vehicles. Mercedes skips that part in its history; however, Mercedes-Benz didn't shy away from its German heritage and it's (once true) mantra that it was the best engineered car in the world.
And that gets me back to Audi. It's clear from looking around LA that Audi's fortunes are up. When other drivers see so many Audis on the road, they remember to put Audi on their short list when shopping for their next car.
Audi's "Truth in Engineering" campaign won't help brand Audi in customers' minds. But I know what will work for Audi: Fresh, hot, new products. And Audi has lots of them coming very soon.
I got an email today from Audi signaling the introduction of the new TT, just in time for summer convertible driving season. The new TT should have been in the US market sooner; however Audi indicated last year that the TT (based on the VW GTI) would be delayed due to some emissions issues. The TT introduced this month will be a 2008 model meeting all federal and California emissions requirements.
The new TT (named after the Tourist Trophy race that Auto Union conquered in the 1930s) is hitting dealer lots now. It's all-new and very sexy. From all magazine reports and picture
s, the new TT is a guaranteed hit -- particularly in convertible form here in LA.
This summer, Audi will bring its R8 supercar to the US market. The R8 is a gentrified Lamborghini Gallardo. I've already seen one driving around LA with normal (not dealer/distributor or manufacturer) California plates. Maybe that was the one Audi gave to Jay Leno to drive. This car is hot. And I'm sure that every single one is pre-sold.
In fact, the R8 is so hot that Audi is implementing the Ferrari sales system when it comes to the R8. Audi will ask new owners to sign an affidavit stating that they will give t
he dealer the first crack at buying back the R8 if they sell it. Originally (before the stupid new "Truth in Engineering" campaign), the US allotment of R8s was 100. That's been tripled to 300 and Audi says that its dealers could easily sell many more. However, Audi wants to keep production low to make the car more exclusive. The buyback program also helps dealers control the secondary market for the R8 and discourages speculators who want to buy and flip the car at a huge profit.
For the first time in 11 years, Audi will make a 4-seat coupe. In November, the beautiful new coupe will go on sale in the US. The base A5 coupe will get a reworked versi
on of Audi's excellent 3.2 liter direct-injection gasoline V6 while the S5 gets the corporate 4.2 liter V8 with a whopping 354-hp and 325-lb ft of torque. The S5 will be here first in November while the A5 coupe follows in early 2008.
Quattro all wheel drive is optional on the A5 and standard on the S5. The new version of Quattro splits torque front to rear at 40/60 to give the car a sportier, rear drive feel. I wish my A6 had this torque split; however, in the past, Quattro has been much closer to a 50-50 split for a very "neutral" feel.
The A5 is the first car to be styled by Audi (and now VW-group) design boss Walter de'Silva. He thinks it's the most beautiful car he's ever penned and even the harshest
critics seem to like it. I really think it's slick. I particularly like that the A5 doesn't have a B pillar. Audi finally has a coupe to compete with the Mercedes CLK and the BMW 3-series.
The current A4 Cabriolet will be discontinued in favor of an A5 convertible. This one is hard to hate too!
Within 18 months, Audi should have its new small SUV in the US. The Q5 will be built on the car platform (not that of the VW Touareg) and will replace the Audi Allroad wagon-on-steroids that was discontinued with the last generation A6.
And not to be outdone by the Mercedes CLS-Class 4-door coupe and an up
coming BMW version of the same, Audi has a new large coupe to be called the A7. Here's a picture of the concept A7.
In addition to fresh models with great design, Audi has lots of trick engineering it's been developing that will show up in the new models. Direct-gas injection is standard across the range of engines. New variable valve timing software helps torque delivery at all speeds.
Audi's new "eight speed" CVT simulates shifts of a regular transmission to give it a more mechanical and sporty feel. It can even be shifted manually!
DSG, Audi's excellent dual-clutch clutchless manual transmission, has been upgraded to S-tronic with faster, smoother shifts. The R8 gets a race version of the sequential six-speed manual (clutchless) gearbox called R-tronic.
We will also get an Audi diesel-powered sooner than later. As I wrote last week, th
e German auto manufactures will bring clean diesel technology to the US this fall in the form of the Mercedes-Benz E320 BLUETEC. Audi will bring a 3.6 liter V6 direct inject diesel engine with BLUETEC technology to the US, first in the Q7 and then in future models like the upcoming smaller SUV the Q5.
Then there is Audi's fantastic job of reviving the Lamborghini brand. What once used to be an exotic Persian chariot parked in front of a restaurant on Sunset Plaza has become a distinctive real-world boy-toy in electric colors with fire-breathing V12 and V10 engines. In an amazingly well-executed example form of corporate synergy, Audi has transplanted the Lamborghini V10 into the S8 and S6. These are fantastic cars, combining sophisticated engineering with more-than-skin-deep luxury.
It doesn't hurt Audi that LA is ground zero for its S-line autos. Where else do you see an S8, an S6 or an RS4 on a daily basis? These specialty products that rival Mercedes AMG and BMW M cars definitely raise Audi's image with consumers even if these racers are only sold in very low volumes.
If you have already forgotten the slogan "Never Follow", have no fear, "Truth in Engineering" is here. But it won't be the slogan the customers remember. Audi will grow because of its extraordinary investment in new products and new technology. Audi mentions its Auto Union heritage and history on its website, particularly in the R8 microsite. So why won't Audi take the plunge and explain to customers the meaning of the four rings and its storied history of Auto Union racing cars? Why not translate the gaping-mouth grill design language? The once-controversial design element is now widely accepted in the marketplace.
Brand image is important. But product is king. Audi's exceptional new and existing products will propel its growth and prominence in the market. We will see it all here in LA first; then the rest of the country.
