Audi aims for huge jump in sales, but obstacles remain
11-15-10, 05:46 AM
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Audi aims for huge jump in sales, but obstacles remain
Audi aims for huge jump in sales, but obstacles remain
Among the challenges: Awareness and customer satisfaction
Read more: http://www.autonews.com/apps/pbcs.dl...#ixzz15MIOaecI
Among the challenges: Awareness and customer satisfaction
Read more: http://www.autonews.com/apps/pbcs.dl...#ixzz15MIOaecI
Audi aims for huge jump in sales, but obstacles remain
Among the challenges: Awareness and customer satisfaction
Audi of America President Johan de Nysschen, right, and marketing boss Scott Keogh hope to increase U.S. awareness of the brand.
Jason Stein
and Diana T. Kurylko
Automotive News -- November 15, 2010 - 12:01 am ET
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HERNDON, Va. -- In a brightly lit fourth-floor conference room nestled in a swath of Virginia forest that could double as a bit of Bavaria, Audi of America President Johan de Nysschen slides a thick handbook across the table.
"It's a pledge," de Nysschen tells his visitors. "Every dealer who accepts our plan has to sign it."
The oath -- autographed by Audi's dealer body when the German automaker rolled out its revamped U.S. dealer training program this summer -- is more than just a paper promise to raise customer satisfaction.
De Nysschen, 50, a hard-charging, straight-talking South African with a dry sense of humor and a small smile, wants a commitment.
"I will not be happy," he says, "until we are among the top three" in customer satisfaction.
The ongoing question: Can Audi deliver on its end of the deal?
"There are still an awful lot of Americans that do not know what Audi is," said Rebecca Lindland, director of strategic review at IHS Automotive in Boston. "They do not have the brand recognition that BMW and Mercedes have."
After decades of fits and starts, underperformance and promises of renewed ambition, Audi is on fast-forward with its North American plan. It is making its play with smaller premium cars as well as large sedans, introducing diesels, increasing marketing and improving the customer experience at the dealer level.
"We are in year five of a 10-year plan for development in this market," de Nysschen said in a recent interview. "We reached the point where the next phase is needed to roll out and add firepower to the brand."
The wave Audi wants to ride is sales of 200,000 vehicles by 2015 -- an ambitious plan to double U.S. sales within five years.
"If you are a surfer, you will catch it," said de Nysschen, "or it will pass you by."
This year Audi will top its 2007 high for U.S. sales of 93,506, and possibly hit 100,000. But that's still a pittance compared to its German competitors.
Mercedes will sell 228,000 vehicles in 2010 and is forecasted to sell 320,000 in 2015, according to IHS Automotive. The BMW brand will hit 215,000 this year and 325,000 in 2015.
Nearly 24 years to the week since an ambitious brand was decimated by a "60 Minutes" report on unintended acceleration, Audi wants to be a contender. But there are lingering questions.
"They have very attractive product, but they do need to increase their brand awareness and their dealerships and the dealership experience," Lindland said.
Those deficiencies are on top of Audi's to-do list.
Scott Keogh, Audi's 41-year-old chief marketing officer, citing internal data, said brand awareness, consideration and showroom traffic have reached record levels. Sales are up 22 percent through October, topping Mercedes' gain of 20 percent and BMW division's 10 percent. Now Audi wants more of those coveted Mercedes and BMW buyers who have been reluctant to move to the brand.
Audi's U.S. commitment is "the strongest it has ever been," said Tom Harper, owner of Harper Audi in Knoxville, Tenn. "That is not some political-speak from a German -- it is coming from the board and [Audi AG CEO Rupert] Stadler and Johan. I think they have put their money where their mouth is."
Audi's plan encompasses four facets, each essential to growth:
1. Product expansion
Audi is planning a massive expansion of its lineup within seven years, including the addition of the next-generation A1 subcompact to its U.S. lineup; a sedan variant of the A3 hatchback; a smaller version of the R8 sports car; and an electric A2 small car.
Referring to tighter U.S. fuel economy standards scheduled to take effect in the middle of the decade, de Nysschen said: "We have seen the challenging targets from the government, and we will bring a response to go for lighter cars and also smaller cars."
Audi of America also is considering its own versions of the next-generation A5 sportback sedan, a four-door version of the A5 currently in Europe; a Q3 small crossover; and an A9 sports car to compete against the Aston Martin Rapide.
Peter Schwarzenbauer, Audi AG board member for sales and marketing, said he expects the A8, A6 and forthcoming A7 five-door sedan to account for 30 percent of U.S. sales within six or seven years, up from the current 15 percent. Worldwide, those segments represent 25 percent of Audi sales. Three new cars are expected to fuel the growth in premium sales. The redesigned long-wheelbase A8 sedan, which accounts for 80 percent of A8 sales in the United States, will debut in November. It will be followed by the A7 next year and a redesigned A6 sedan in 2011.
Audi will add diesel variants to every high-volume product in the United States within five years. The next-generation A4 sedan is likely to receive a four-cylinder diesel engine by 2015.
"The product range and what is coming is the best that we have ever had," said Harper.
2. Dealer bonuses
Ahead of the launch of its next-generation A8, Audi consulted its dealer body in an effort to improve customer service. The result was the "No Limits" pilot program, which ties internal customer satisfaction measurements to J.D. Power benchmarks.
Bonuses will be based on beating the prior year's average level of satisfaction.
De Nysschen said it is an effort to "ratchet up" Audi's customer satisfaction. He said it required a "mind-set change" for dealers.
"We were paying a lot of bonus money to dealers for outstanding service by our own measures," de Nysschen said. But when J.D. Power's customer service index study was released each year, "they'd say [Audi] is OK but not outstanding."
In February, Audi finished 10th out of 13 luxury brands, well below the industry average and Lexus, the industry leader.
"Is there trust if you spend $85,000 on a car?" asked Keogh. "We want that trust at the dealership level."
Audi will begin rolling out No Limits, which began as a pilot program, to all dealers on Jan. 1. Audi created the plan by working closely with 115 of its 273 dealers -- or those that represent nearly 70 percent of A8 sales -- and most in major markets.
Dealer profits remain a priority. Through September, Audi dealers had a 3.2 percent return on sales, up from 2.4 percent in 2009.
3. Retail makeover
Audi showroom upgrades leading up to the launch of the A8 include sliding drawers filled with interior samples, colors and carpets. Audi expects up to 30 percent of A8 buyers to customize their vehicles.
The launch of the A8 marks a launch of showroom upgrades as well. Stores will use the Apple store experience as a model, Keogh said.
Each store will have sliding drawers filled with interior samples, colors and carpets, creating the opportunity for the consumer to customize a vehicle. Audi expects up to 30 percent of A8 sales to be customized.
Each dealership will have three iPads that customers can use for walk-arounds, with or without a sales consultant. Audi is also launching an iPad app that will allow consumers to configure cars in the showroom.
Audi will introduce online service scheduling, institute customer pickups at any location and provide in-home or in-office assistance with service.
The benchmark is a Lexus experience.
4. More marketing
Audi is everywhere when it comes to marketing -- including the Super Bowl and Academy Awards -- and the plan is to go even bigger.
Keogh said the marketing budget will increase up to 20 percent next year on top of already record spending. Audi will advertise in the Super Bowl again next year and plans to get even more aggressive in online, outdoor and print ads.
"We have been spending throughout the down market, and that will continue," he said.
Said de Nysschen: "When the captains of the industry are seen driving your product, it confirms the aspirational value of an Audi. We are striving to get to the point where an Audi is seen as a default choice for any premium brand intender."
But will the plan work?
Jeff Schuster, executive director of forecasting for J.D. Power, said that when it comes to positioning, Audi can play a niche role when compared to its German competition.
"BMW has always angled to performance, and Mercedes more on the luxury amenities and the feature and content side," Schuster said. "Audi straddles in between there.
"They focus more on design with a subfocus on performance. ... The way they try to present themselves is different. That is good. You have to have your own niche and identity."
In terms of model range, Audi now matches BMW and Mercedes, from SUVs to niche vehicles.
Schuster said Audi has done a good job expanding the lineup into mainstream vehicles, crossovers and specialty vehicles such as the R8. The A7 sedan will compete against the four-door Mercedes CLS and Audi's high-performance S models compete directly against BMW's M variants and the Mercedes AMG vehicles.
The addition of an A1, Q3 and four-cylinder A4 responds to the push for smaller vehicles by Mercedes and BMW and an attempt to meet CAFE.
"But it is a highly competitive environment," Schuster said. "We will continue to see them edge up their market share but at a slower pace than they have over the last few years."
Read more: http://www.autonews.com/apps/pbcs.dl...#ixzz15MIAOFNa
Among the challenges: Awareness and customer satisfaction
Audi of America President Johan de Nysschen, right, and marketing boss Scott Keogh hope to increase U.S. awareness of the brand.Jason Stein
and Diana T. Kurylko
Automotive News -- November 15, 2010 - 12:01 am ET
Print Email Reprints 5 comments
Recommend
HERNDON, Va. -- In a brightly lit fourth-floor conference room nestled in a swath of Virginia forest that could double as a bit of Bavaria, Audi of America President Johan de Nysschen slides a thick handbook across the table.
"It's a pledge," de Nysschen tells his visitors. "Every dealer who accepts our plan has to sign it."
The oath -- autographed by Audi's dealer body when the German automaker rolled out its revamped U.S. dealer training program this summer -- is more than just a paper promise to raise customer satisfaction.
De Nysschen, 50, a hard-charging, straight-talking South African with a dry sense of humor and a small smile, wants a commitment.
"I will not be happy," he says, "until we are among the top three" in customer satisfaction.
The ongoing question: Can Audi deliver on its end of the deal?
"There are still an awful lot of Americans that do not know what Audi is," said Rebecca Lindland, director of strategic review at IHS Automotive in Boston. "They do not have the brand recognition that BMW and Mercedes have."
After decades of fits and starts, underperformance and promises of renewed ambition, Audi is on fast-forward with its North American plan. It is making its play with smaller premium cars as well as large sedans, introducing diesels, increasing marketing and improving the customer experience at the dealer level.
"We are in year five of a 10-year plan for development in this market," de Nysschen said in a recent interview. "We reached the point where the next phase is needed to roll out and add firepower to the brand."
The wave Audi wants to ride is sales of 200,000 vehicles by 2015 -- an ambitious plan to double U.S. sales within five years.
"If you are a surfer, you will catch it," said de Nysschen, "or it will pass you by."
This year Audi will top its 2007 high for U.S. sales of 93,506, and possibly hit 100,000. But that's still a pittance compared to its German competitors.
Mercedes will sell 228,000 vehicles in 2010 and is forecasted to sell 320,000 in 2015, according to IHS Automotive. The BMW brand will hit 215,000 this year and 325,000 in 2015.
Nearly 24 years to the week since an ambitious brand was decimated by a "60 Minutes" report on unintended acceleration, Audi wants to be a contender. But there are lingering questions.
"They have very attractive product, but they do need to increase their brand awareness and their dealerships and the dealership experience," Lindland said.
Those deficiencies are on top of Audi's to-do list.
Scott Keogh, Audi's 41-year-old chief marketing officer, citing internal data, said brand awareness, consideration and showroom traffic have reached record levels. Sales are up 22 percent through October, topping Mercedes' gain of 20 percent and BMW division's 10 percent. Now Audi wants more of those coveted Mercedes and BMW buyers who have been reluctant to move to the brand.
Audi's U.S. commitment is "the strongest it has ever been," said Tom Harper, owner of Harper Audi in Knoxville, Tenn. "That is not some political-speak from a German -- it is coming from the board and [Audi AG CEO Rupert] Stadler and Johan. I think they have put their money where their mouth is."
Audi's plan encompasses four facets, each essential to growth:
1. Product expansion
Audi is planning a massive expansion of its lineup within seven years, including the addition of the next-generation A1 subcompact to its U.S. lineup; a sedan variant of the A3 hatchback; a smaller version of the R8 sports car; and an electric A2 small car.
Referring to tighter U.S. fuel economy standards scheduled to take effect in the middle of the decade, de Nysschen said: "We have seen the challenging targets from the government, and we will bring a response to go for lighter cars and also smaller cars."
Audi of America also is considering its own versions of the next-generation A5 sportback sedan, a four-door version of the A5 currently in Europe; a Q3 small crossover; and an A9 sports car to compete against the Aston Martin Rapide.
Peter Schwarzenbauer, Audi AG board member for sales and marketing, said he expects the A8, A6 and forthcoming A7 five-door sedan to account for 30 percent of U.S. sales within six or seven years, up from the current 15 percent. Worldwide, those segments represent 25 percent of Audi sales. Three new cars are expected to fuel the growth in premium sales. The redesigned long-wheelbase A8 sedan, which accounts for 80 percent of A8 sales in the United States, will debut in November. It will be followed by the A7 next year and a redesigned A6 sedan in 2011.
Audi will add diesel variants to every high-volume product in the United States within five years. The next-generation A4 sedan is likely to receive a four-cylinder diesel engine by 2015.
"The product range and what is coming is the best that we have ever had," said Harper.
2. Dealer bonuses
Ahead of the launch of its next-generation A8, Audi consulted its dealer body in an effort to improve customer service. The result was the "No Limits" pilot program, which ties internal customer satisfaction measurements to J.D. Power benchmarks.
Bonuses will be based on beating the prior year's average level of satisfaction.
De Nysschen said it is an effort to "ratchet up" Audi's customer satisfaction. He said it required a "mind-set change" for dealers.
"We were paying a lot of bonus money to dealers for outstanding service by our own measures," de Nysschen said. But when J.D. Power's customer service index study was released each year, "they'd say [Audi] is OK but not outstanding."
In February, Audi finished 10th out of 13 luxury brands, well below the industry average and Lexus, the industry leader.
"Is there trust if you spend $85,000 on a car?" asked Keogh. "We want that trust at the dealership level."
Audi will begin rolling out No Limits, which began as a pilot program, to all dealers on Jan. 1. Audi created the plan by working closely with 115 of its 273 dealers -- or those that represent nearly 70 percent of A8 sales -- and most in major markets.
Dealer profits remain a priority. Through September, Audi dealers had a 3.2 percent return on sales, up from 2.4 percent in 2009.
3. Retail makeover
Audi showroom upgrades leading up to the launch of the A8 include sliding drawers filled with interior samples, colors and carpets. Audi expects up to 30 percent of A8 buyers to customize their vehicles.The launch of the A8 marks a launch of showroom upgrades as well. Stores will use the Apple store experience as a model, Keogh said.
Each store will have sliding drawers filled with interior samples, colors and carpets, creating the opportunity for the consumer to customize a vehicle. Audi expects up to 30 percent of A8 sales to be customized.
Each dealership will have three iPads that customers can use for walk-arounds, with or without a sales consultant. Audi is also launching an iPad app that will allow consumers to configure cars in the showroom.
Audi will introduce online service scheduling, institute customer pickups at any location and provide in-home or in-office assistance with service.
The benchmark is a Lexus experience.
4. More marketing
Audi is everywhere when it comes to marketing -- including the Super Bowl and Academy Awards -- and the plan is to go even bigger.
Keogh said the marketing budget will increase up to 20 percent next year on top of already record spending. Audi will advertise in the Super Bowl again next year and plans to get even more aggressive in online, outdoor and print ads.
"We have been spending throughout the down market, and that will continue," he said.
Said de Nysschen: "When the captains of the industry are seen driving your product, it confirms the aspirational value of an Audi. We are striving to get to the point where an Audi is seen as a default choice for any premium brand intender."
But will the plan work?
Jeff Schuster, executive director of forecasting for J.D. Power, said that when it comes to positioning, Audi can play a niche role when compared to its German competition.
"BMW has always angled to performance, and Mercedes more on the luxury amenities and the feature and content side," Schuster said. "Audi straddles in between there.
"They focus more on design with a subfocus on performance. ... The way they try to present themselves is different. That is good. You have to have your own niche and identity."
In terms of model range, Audi now matches BMW and Mercedes, from SUVs to niche vehicles.
Schuster said Audi has done a good job expanding the lineup into mainstream vehicles, crossovers and specialty vehicles such as the R8. The A7 sedan will compete against the four-door Mercedes CLS and Audi's high-performance S models compete directly against BMW's M variants and the Mercedes AMG vehicles.
The addition of an A1, Q3 and four-cylinder A4 responds to the push for smaller vehicles by Mercedes and BMW and an attempt to meet CAFE.
"But it is a highly competitive environment," Schuster said. "We will continue to see them edge up their market share but at a slower pace than they have over the last few years."
Read more: http://www.autonews.com/apps/pbcs.dl...#ixzz15MIAOFNa
Last edited by LexFather; 11-15-10 at 05:50 AM.
11-15-10, 06:35 AM
#2
There is a lot here that I just don't buy into.
Doubling sales in five years? Ambitious, but ok.
A6, A7 and A8 making up 30% of U.S. sales? The A6 sells poorly and the A8 is a speck on the radar...I don't expect the new one to be much better either. I can't see A7 accounting for much volume.
I can't believe MB and BMW think they will be selling 300,000 - 350,000 models a year in the U.S. by 2015. I am not even sure that is good for a luxury brand.
Doubling sales in five years? Ambitious, but ok.
A6, A7 and A8 making up 30% of U.S. sales? The A6 sells poorly and the A8 is a speck on the radar...I don't expect the new one to be much better either. I can't see A7 accounting for much volume.
I can't believe MB and BMW think they will be selling 300,000 - 350,000 models a year in the U.S. by 2015. I am not even sure that is good for a luxury brand.
11-15-10, 09:22 AM
#3
Lexus Fanatic
The S-tronic gearbox alone, in some instances, will help sell the car. If they want sales, they will need to bring it back to all of their American-market models.
11-15-10, 09:50 AM
#4
Lexus Champion
This information may not effect their sales too much, but in the new CR magazine the following Audi models are on the Not Recommended list.
A3 (declining reliability), A6 3.0T and Q5 (both with sufficient data, but are Below Average).
The Q7 is already on the NR list.
A3 (declining reliability), A6 3.0T and Q5 (both with sufficient data, but are Below Average).
The Q7 is already on the NR list.
11-15-10, 09:59 AM
#5
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It seems the luxury brands are bullish on buyers and the economy. If Audi doubles sales with their sales tactics that is impressive since they rarely get into huge discounts and lease specials like the other 2 Germans. If they simply resort to those tactics, well its not as impressive.
If Audi does continue to dominate to me with Infinit and Acura struggling this hurts Lexus image since you now have 3 legitimate German luxury brands vs the lone Lexus. It might sway consumers to really just buy German for luxury and ignore Lexus.
If Audi does continue to dominate to me with Infinit and Acura struggling this hurts Lexus image since you now have 3 legitimate German luxury brands vs the lone Lexus. It might sway consumers to really just buy German for luxury and ignore Lexus.
11-15-10, 07:02 PM
#7
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I'd buy an A4 over the comp. if I had the money.
I'd love to see a 2.0L A6 in the States. A highly efficient, AWD, midsize that hit 60 MPH in 7 seconds sounds like a great offering for the world of uncertain fuel prices.
I'd love to see a 2.0L A6 in the States. A highly efficient, AWD, midsize that hit 60 MPH in 7 seconds sounds like a great offering for the world of uncertain fuel prices.
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