Audi: Pedal to the Metal

Posted by: Jim Henry on March 03, 2008

It will be interesting to see how close Audi of America comes to its stunningly ambitious goal of becoming the biggest-selling luxury brand in the United States, by 2015.

Ralph Weyler, then Audi AG’s board member in charge of worldwide sales and marketing, said that was Audi’s ambition, in an interview at the Detroit auto show in January.

It’s good to have “stretch” goals to motivate the troops, but that particular goal sounds pretty far-fetched, considering how much bigger today’s No. 1 Lexus is. The timing is also short, since 2015 is only seven years away – just about the shelf life of one new-car generation.

When I heard Weyler say it, I thought I heard wrong. I asked in all seriousness whether he said 2050, or 2015. He confirmed 2015. He laughed and said, “By 2050, we’ll all be dead!”

(A little over a month later, Audi announced that Weyler was leaving the company to start his own consulting business, with customers including Audi and Volkswagen.)

Audi’s U.S. sales in 2007 were 93,508 cars and light trucks, a 3.4% increase from 2006. No. 1 Lexus had U.S. sales of 329,177 in 2007, up 1.8%. The BMW brand had 293,795. Mercedes-Benz had 253,492, and Cadillac had 214,727.

For Audi to overtake Lexus, it will have to more than triple its U.S. sales, and also overtake BMW, Mercedes-Benz and Cadillac. Not to mention Infiniti and Lincoln. That’s also assuming that in the interim, Lexus sales stay the same. If Lexus sales continue to grow, Audi’s target gets even higher.

In the Detroit show interview, there was another point of mutual misunderstanding. I told Weyler as a joke – and only as a joke -- that if Audi wanted to be No. 1, then Audi better advertise on the Super Bowl, which at the time was still a few weeks away.

To my surprise, he took me seriously. “Why not the Super Bowl?” he said. “Sometimes you need a big blowup, like fireworks, where the whole sky is illuminated.”

I didn’t get the hint. I was genuinely surprised to hear later that Audi really was advertising on the Super Bowl.

I always associate the Super Bowl with a disastrous experience Subaru had in the early 1990s. Subaru blew pretty much its entire annual ad budget for spots on the Super Bowl, to introduce the brand-new Impreza model. Subaru would break out of its niche, go “mainstream” and sell vastly more cars.

At the time, the Subaru brand had been tortured for years by a little angel on one shoulder and a little devil on the other. Should Subaru be a “Big Car Company,” and continue to butt heads with Toyota, Honda and Nissan? The major players could easily undercut Subaru on the price of entry-level, front-drive cars. Or should Subaru stick to all-wheel drive, and be content to be a smaller, niche player?

The angel said, “Stick to your niche. People in New England and Colorado and Alaska love you! You can make a good living by sticking to your niche!” The devil said, “Don’t listen to that sissy. Imagine how big you’d be, if you had even half the market share in L.A. that you have in Vermont!”

So Subaru decided to break out of its comfortable niche. Critics raked the Super Bowl ads over the coals, after which the brand was forced to “go dark,” having spent its ad budget. Much later, Subaru executives admitted to suffering from “Big Car Company-itis.”

Subaru’s oddball appeal makes it an attractive alternative to plain-vanilla import brands. Similarly, Audi buyers pride themselves on being independent thinkers. They’re not willing to pay a premium for a mere (read: Mercedes or BMW) hood ornament. They don’t like to see themselves coming and going. For Audi to make such a big jump in sales in such a short time, it’s going to have to mess with that core, niche-player appeal.

True, Audi has a lot going for it: powerful, clean-burning diesel engines in the pipeline for U.S. models; big success in other global markets; an all-new entry level A4 coming soon. Unlike Subaru’s long-ago effort, Audi’s “horse’s head” Super Bowl ad got some positive reviews. And Audi presumably has a bigger ad budget than Subaru.

I just hope that at Audi, they’ve had their “Big Car Company-itis” shots. Also that nobody’s bet the ranch on being No. 1 in the United States by 2015. A safer target would be 2050.

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Reader Comments

Noz

March 3, 2008 11:00 AM

Could not agree with your conclusion more. Just more piling on of German arrogance and hype on Audi's part. A mediocre quality rep on top of some disastrous years in the 80's, or was it 90's, when pedal placement put their cars out of control and into those of others, through closed garage doors, not to mention into swimming pools. A near-death experience for Audi, too bad it did not finish them off and save a lot of customers a lot of grief well down the road.

Nothing quite like desperation on the part of unstable suits in the corner offices. I predict musical chairs for manage-ment, at least that in this country. Not too different from the recent childish behavior at Kia.

James

March 3, 2008 02:28 PM

Maybe I'm just old-school, but to me "luxury" means "exclusivity" and not just a fancy leather-and-wood cabin. Here in Hawaii Lexuses (Lexi?) are a dime-a-dozen, especially the uber-Camry, a.k.a. the ES. So then the marketers come up with a term like "entry-level luxury" to cover the little fact that cars aren't especially luxurious in the first place. Please.

Noz

March 3, 2008 09:03 PM

I have to differ with James' definition of 'luxury'. To me it has little to do with exclusivity, that is another matter entirely. In fact the rarity of something is nothing but that. Hells belles, the item in question might be the canned gasses of whale intestinal 'eruption'. Rare, exclusive, hardly a luxury--unless you are some classic weirdo such as Kellogg (of cereal-fame) who carried dried human excre-ment around with him in a fancy hanky to show off at his dinner parties. Very strange man, a sicko, great fan of colon-cleansing... most likely a Democrat.

The Lexus ES is indeed 'luxury' of a sort, and if you doubt this just consider easily available vehicles of the 30's, 40's, 50's, 60's, 70's 80's and into the 90's. Ever driven a buck-ing bronco like the 'exclusive' '41 Lincoln Zephyr cabriolet? How about fighting the wheel of an olde Cord? This was luxury?


Bill

March 4, 2008 09:19 AM

This "goal" is a continuation of the pipe dream of parent VW, who said it will overtake Toyota by 2015 also.
Typical German attitudes of grandeur and arrogance.
VW/Audi needs to do a lot to overcome its well-deserved reputation of poor quality and irrelevant cars.
Maybe by 2050, probably not.

Sam

March 6, 2008 07:58 AM

Most of Audi designs are boring (Of course there are some exceptions: TT, S5, R8).
Audi will increase its volume but will always be limited by the fact that it is front-wheel drive and that you do not get the driving experience you do when you drive a BMW. Audi is an example of marketing success, rather than engineering success.

kurt wiley

March 7, 2008 01:48 PM

Audi is surprisingly ambitious given its tiny dealer network has (for the dealers I've visited in LA CA and Portland OR) the weakest service and support of any brand.
Why not, Audi, just drop your entry to mid-level stuff (let your VW sister do that), and focus on the high-end cars you take pride in to the rich and famous? The huge profits you will make on such vehicles will alleviate need to increase volume! Stay in your tiny niche and be proud of it!

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