Innovation & Design

On a Roll at Audi


German auto maker Audi unveiled a long-awaited SUV-crossover called the Q7 at the Frankfurt Auto show, which opened Sept. 16 (see "Hot Wheels from Frankfurt"). The stylish seven-seater, which will start around $60,000, is aimed at the U.S. market, where Audi is driving to increase its market share. Like BMW's X-5 and Porsche's Cayenne, Audi's Q7 offers top performance and sporty handling in a large SUV. But Audi beats the competition in roominess and attention to interior detail worthy of a luxury sedan.

In reality, the Q7 is a blend of SUV, minivan, and sedan – and its streamlined design sets it apart from the pack, much like Mercedes' new R-Class crossover, which is a tad smaller. Audi CEO Martin Winterkorn spoke with BusinessWeek Senior European Correspondent Gail Edmondson at the Frankfurt Auto Show about the Q7 and Audi's push to close the gap with premium-car rivals BMW and Mercedes. Following are edited excerpts of their conversation:

Audi's latest models, from the A3 compact to the A8 luxury sedan, are boosting sales and profits, stealing sales from luxury rivals, and polishing Audi's image as a premium auto maker. What's the next step?

We have to grow. Our challenge is to extend the strength of Audi's brand in Europe to customers around the world, especially in the U.S. Our new products have shown we can develop very desirable and emotional cars which customers will pay a lot of money for. The next models will build on that emotional character and will be even sportier. They will have better handling, better brakes, and better gas mileage.

As an engineer, you are constantly involved in every detail of new-model development at Audi. Did you influence the design of the Q7? Is there somewhere we can see your signature on the car?

Look at the blinker on the rear-view mirror on the driver's side -- that's a good example. See how fine and thin it is. In the mirror itself, there's a very small square that blinks without disturbing or blinding the driver at night when the lane-change blinker is activated.

On many cars, the light is so bright it blinds the driver, but the Q7's doesn't. These are the fine details we need to communicate better to customers.

So you intervened on the blinker to change the design?

Yes.

What are the key challenges for Audi in the next 12 months?

One is the next set of quality rankings, especially J.D. Power's [a division of The McGraw-Hill Companies, which also owns BusinessWeek Online]. It always comes out on my birthday in the spring. We want to be in the top five. I hope I get this wish. The other big event is the launch of the second-generation TT coupe-convertible. And we want the Q7 to be a big success.

The TT is an icon. Won't it be a hard act to follow?

We want the next generation to become a real alternative to other sports cars.

Audi is improving both quality and profitability at a time when rivals such as Mercedes are stumbling on both counts. What's the key to top performance in a tough global auto market?

You have to listen to what's going wrong [inside a company] all the time. There are always problems -- problems on the finance side, on the sales side, on the product side. You have to take them seriously. At the end of the day, it's product, product, and product.

You have to listen to what the dealers are saying too. Audi's culture is very product-oriented, unpolitical, and focused on the fundamentals. We have a culture that endorses internal debate and argument. As a manager you have to be able to fight with colleagues on an intellectual plane without feeling attacked personally.

This is especially important when it comes to discussing mistakes that are made. Everyone makes mistakes, even me. The worst thing is to make people feel wounded. They have to feel their contribution is valid in identifying and solving problems.

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