Audi’s premium plan
German brand is making the largest investment in company history; it’s all part of its aim to be No. 1 in luxury
CEO Rupert Stadler has Audi back on a record course. After suffering its first year-on-year decline in more than a decade in 2009, the German premium brand reached a new high with nearly 1.1 million global car sales in 2010. Audi has set an even tougher goal for this year: 1.2 million sales. The hard-charging CEO is determined to make Audi the world’s No. 1 premium brand with 1.5 million in annual sales by 2015. Stadler, who turns 48 next month, discussed the next steps and new models he is counting on to reach his target in an interview with Automotive News Europe Editor Harald Hamprecht.
You have set ambitious goals in your Strategy 2015 plan. Have you been hitting your targets?
Strategy 2015 was essentially worked out five years ago. So we have already covered a long distance along our path of growth. And we have met all of our intermediate goals – financially, in our product portfolio, technologically, in our positioning worldwide and in our organization. And this despite the global financial and economic crisis of 2009, which no one foresaw. So that we can continue to take major steps forward, we’ve just announced the largest investment program in company history. We will invest 11.6 billion euros (about $16 billion) by 2015 in the development of new products and technologies.
Audi has 58,000 employees worldwide, up from 52,000 in 2005. In 2011, you plan to create 1,200 new jobs. How many more people will you add by 2015?
We need more experts to be able to grow further. But we will assess the situation continuously and very carefully and decide on a regular base. Since we will grow substantially outside our home market in the next few years, many of these new employees will be hired outside of Germany.
Audi’s crucial launches 2011-2015
2011 A5 face-lift, A6 sedan, A6 Avant, Q3, RS3
2012 A1 5-door, A1 quattro (S1), A3, A6 hybrid, A8 hybrid, Q5 face-lift,
R8 E-tron, S6, S7, S8
2013 A3 Sportback, A3 cabrio
2014 A1 face-lift, A3 sporty sedan, A4, Q7, TT
Not decided: A1 cabrio, A1 E-tron, A2, A3 E-tron, A7 cabrio, Q1, R4
Will you be the most profitable premium manufacturer by 2015 as well?
In our strategic roadmap we defined a number of targets we aim to achieve in the next few years. Profitability is one of them but not the only important one. Customer satisfaction and quality are other important goals. We want to become the most successful premium brand and this means that all these targets have to be “premium.”
Audi parent VW Group wants to sell more than 10 million cars by 2018. What will Audi’s annual sales be by then?
We announced our goal of 1.5 million automobiles by 2015. And of course we don’t want to stop there.
Some critics say that Audi has lost its edge when it comes to launching next technologies quickly. How do you respond to that?
True innovation does not have to do with speed only. The best innovation at competitive costs is what counts for the customer.
What is your environmental strategy?
This spring we are bringing out the Q5 as a hybrid in Europe, and the A6 at the end of the year. In 2012, the A8 follows. It is likewise based on the modular longitudinal platform. So we are well positioned with this type of powertrain. These models will arrive later in China and the U.S.
What purely electric cars are you planning?
We are introducing our R8 supercar at the end of 2012 in a short production run as an E-tron variant. We see that as a clear technology project. And at the other end of the model lineup, with the electrically driven A1 E-tron, we are also planning a short production run test. We will launch it in the summer of 2011 in Munich, initially with 20 cars.
When will you start high-volume production of electric vehicles?
We’re still moving through an early phase with the electric car, in view of its marketing as well — in leasing or sales as a collector’s car. In the first place, lithium ion batteries must be industrialized; that is happening with hybrids, which are acting as a bridging technology. In addition, many questions with regard to range, performance and crash safety have not been clarified yet. So we shouldn’t get carried away with our electric-car euphoria. Our industry finds itself in the middle of a system change and we still have a number of challenges to solve.
You currently have a total of 37 bodystyles for sale. By 2015, it is supposed to be 42. Has there already been a decision to build an entry-level SUV called the Q1?
The Q-family certainly still has potential. It still isn’t complete. The decision on this hasn’t yet been made.
Will you make a new entry-level model based on the VW Up?
Right now, I can’t imagine a new model below the current A1 entry-level model.
To reach your 2015 global sales goal you need to boost annual production by more than 300,000 units. You have announced you are expanding your Hungary plant. How much added capacity will that provide and where else will you expand?
Hungary will provide an additional capacity of 125,000 units starting in 2013. This year, the Audi Q3 has its run up [at sister brand Seat’s plant] in Martorell, Spain, with a maximum capacity of 100,000.
Germany was your top sales market last year, closely followed by China. How will Audi’s top five ranking change in the next four years?
China will become No. 1 and Germany will be No. 2. I think that our volume in the U.S. market can grow 50 percent over the next five years and that we can reach 200,000 units a year some time after 2015. We see big potential in the U.S. market for Audi and it is a strategic market for us. No. 4 and No. 5 are in Europe: the UK and Italy.
Audi is growing fast in China. Where else will the brand see big gains?
We will grow mainly in the BRIC countries [Brazil, Russia, India and China], meaning developing countries, in the next few years.
How strong will growth in China be?
Our dealer network now consists of 250 dealers, and each year we are adding at least 50 new dealers. We are currently opening a new dealership every week. So in three or four years, we could be at about 500 dealerships.
Will the growth cool down?
In October 2010, we celebrated an anniversary — a total of 1 million sales in 22 years. We’re giving ourselves just three years for the next million cars sold. To meet the demand, we are going to have to increase our production capacity. We want to defend and expand our market leadership in the premium segment.
In the U.S., you are behind rivals BMW and Mercedes.
That’s the reason we want more growth there. Why shouldn’t we succeed in the U.S. when we have succeeded in Europe and China? In 2010, we surpassed the 100,000 sales mark for the first time, with 101,600 U.S. deliveries. An increase of 23 percent compared with the previous year. So we are well on our way in the States. In 2015 we want to sell 150,000 to 160,000 units in the U.S., and up to 200,000 in the long term.
You currently aren‘t even keeping up with the sales and only have an availability of 14 days; 30 would be normal.
Yes, that‘s correct. But that’s not only the case in the U.S., but worldwide. The reason rests with our suppliers. Not all them made it through the crisis of 2009 as well as we did. While we bridged 2009 with reduced working hours, our suppliers had to lay off people. This has caused production bottlenecks at some suppliers. For starters, capacity must be ramped up again. I believe that the situation will be back to normal in six to nine months.
In October 2011, you will launch Q5’s little brother, the Q3, in Europe. Is that model also going to the United States?
There is still no decision on that. If we were to do that, we would have to figure on 2012 at the earliest, since the European introduction will be in the summer of 2011. Currently, we cannot even completely meet the high demand for the Q5.
What is going on with the A1?
Even with just one body style, the two-door, we’re projecting that we will exhaust the 120,000-unit production capacity of our Brussels factory this year. This could happen even though we haven’t introduced our entry-level model in all the markets yet. Therefore, we don’t have the capacity to introduce the A1 in the U.S. right now. We also would rather fully exhaust the market potential with model lines already offered in the U.S. before we bring in new models.
Are you bringing out more versions of the A3 the United States, such as a notchback?
No. We don’t see sufficient potential for it in the U.S. at the moment. Furthermore, we don’t want to unnecessarily complicate our dealers’ business. They need training, demo cars, and space in their showroom for each new version. “Keep it simple” is our motto.
What is happening with the A5 as a four-door, that is to say, a sportback?
We won’t introduce this one in the U.S. either – for the previously mentioned reasons. Moreover, for starters, the A5 is due to be positioned as a coupe. Our U.S. colleagues are very fond of the A4 and see still more potential for it.
Your rivals are transferring more and more production to the United States. When will you starting building cars there?
We have this issue on the agenda as a priority. We will certainly make this decision before 2015. Today, it still isn’t necessary, but I feel that Audi is also a hip brand in the U.S. with great growth potential. In the long term, we will manufacture locally where our market positioning requires it.