The German carmaker is pouring money into marketing to expand its share of the luxury market and push diesel models in the U.S.
CEO: Rupert Stadler
Driving Vision: Audi aspires to be the leading premium brand within six years
Ingolstadt, Germany - Your industry is in the midst of a savage downturn and your competitors are slashing their marketing budgets. So what do you do? If you're German automaker Audi, you boost your U.S. ad spending by 20%, blow $6 million or so on a Super Bowl spot, and even sponsor television coverage of Barack Obama's inauguration. "We took the crisis as a huge opportunity," says Peter Schwarzenbauer, the Audi management board member in charge of marketing.
The contrarian approach seems to be paying off. The Volkswagen unit edged upward on this year's Best Global Brands list, to 65 from 67, while archrivals Mercedes-Benz and BMW slipped (though both still outrank Audi). More important, Audi's global sales have held up reasonably well, falling just 7.5% through August, vs. 17% at Mercedes and 18% at BMW. Audi benefited from its relatively fuel-efficient lineup and its strong position in China, where sales are still growing.
In fact, the financial crisis has been pretty good to Audi. In Europe this year the automaker has outsold Mercedes and BMW, a huge milestone for a brand that was close to extinction in the 1960s. In the U.S., Audi sold 8,000 cars in August, up 26% from the year before. For 2009, its share of the U.S. premium market has risen to 8.2% from 6.5%, though American sales are still down 10%. Globally, Audi aims to be the leading premium brand by 2015.
Audi's 60-second spot during the Super Bowl was a not-so-subtle declaration of war on competitors. In a series of chase scenes, a suave action hero fleeing a bunch of bad guys cracks up a Mercedes and a BMW before finally escaping at the wheel of an Audi A6 sedan. The message: Those other brands have had their day. Now it's Audi's turn.
That's an audacious attitude for a company that still sells fewer than half as many cars in the U.S. as either of its German rivals. Equally bold is Audi's strategy of pushing its fuel-efficient diesel engines. Diesel cars have traditionally been a tough sell in the U.S., where the fuel is usually more costly than gasoline and filling up may entail queuing patiently behind big rigs. But the company says its research shows that a third of U.S. drivers would buy diesels, which can be as efficient as hybrids. To reinforce the message, a spot now running on American TV depicts barrels of oil rolling through streets before rumbling up the ramp of a cargo ship. If a third of Americans drove diesel cars, the ad claims, the U.S. could send back 1.5 million barrels of imported oil daily. "Diesel—it's no longer a dirty word," says the voiceover.
Audi's biggest problem may be restive U.S. dealers. The automaker wants to raise its profile with sleek new showrooms sporting silver-mesh facades and curvaceous windows. But given the recession, some dealers are balking at the $1 million-plus expense. Howard Cooper sells Audis, Volkswagens, and Porsches in Ann Arbor, Mich. "All three brands want new investments in dedicated showrooms and staff, and it's a tough time to do that," Cooper says. For its part, Audi argues that the new design not only looks cool, but also cuts operating costs 30% by saving space and energy. "You have to convince the dealers it's a win for them as well," says Schwarzenbauer.
With David Kiley in Ann Arbor, Mich.
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