What's Audi's problem w/ selling in the U.S.???

[Deutsch]

As I have said many a time before.... Marketing!!!

Audi's Angst: Great Cars, Goofy Governance
By Frank S. Washington Email

Date posted: 06-12-2006

Audi makes some of the best luxury sedans in the world, but its U.S. sales would suggest that these guys produce motorized tin cans.

In the last 15 months, I've test-driven Audi's A6, A4, A3, A6 Avant (wagon), S4, and most recently, the Q7. With each one, my admiration and adoration for all things Audi grows.

However, nowhere near enough consumers share my lofty opinion of Audi. Through May, Audi sold 32,500 passenger cars in the U.S. Meanwhile, BMW sold 88,000 cars, Lexus sold 67,000 and Mercedes-Benz had sales of 71,000.

The Big Three of the U.S. luxury market are truly wondrous manufacturers that create top-notch products. But not one of them produces anything that is two times, much less three times, better than any Audi rolling off an assembly line today. But that's what their respective sales suggest. The gap would be wider if we counted SUVs, because Audi's Q7 just went on sale.

Anyway, I've been pitching this story about Audi's great products and so-so sales for a month but it just wouldn't stick. Then I finally got a grip on the true nature of Audi's U.S. sales problem.

A journalism professor told me years ago that good editing could cover up bad reporting, but good reporting could not cover up bad editing. In Audi's case, great products have not been able to overcome mediocre management.

BMW, Lexus and Mercedes have been adding all-wheel-drive sedans to their lineups. Audi's quattro all-wheel-drive system is in its 26th year. There's not an Audi built today that can't be equipped with it. By now, all-wheel drive should be synonymous with Audi, but it's not.

Anybody who knows anything about the auto industry remembers the scourge that befell Audi after an erroneous TV news magazine report in the late '80s said that one of its models unexpectedly lurched forward. Government tests proved the report false. But for a decade or more, the episode was used to explain away Audi's poor sales in the U.S. Bottom line: It was really just a case of lousy crisis management on the part of Audi.

Still, Audi has spewed out products that match up with just about everything that BMW, Lexus and Mercedes-Benz produce. Audi's U.S. lineup is comprised of the TT coupe and roadster; the A4 sedan, Avant and cabriolet; the S4 sedan, Avant and cabriolet; the RS 4; the A3; the A6 sedan and Avant; the A8 long wheelbase and short wheelbase; and the new Q7 sport-utility. Drivetrain selections multiply the offerings to about 65 variants. They will be joined by the S6 and S8 in the fall, and the R8 early next year.

Audi is rolling out its S-Line, the performance version of its models. But it is also creating a line of RS models that could stand for "Really Serious" performance. For instance, the S4 has a 340-horsepower V8. The RS 4 has a 420-horsepower V8 that can run it up to 60 mph from zero in 4.7 seconds.

Audi offers manual and automatic transmissions. And its DSG (direct-shift gearbox) is as smooth and shifts gears as quickly as any transmission on the street side of a Formula 1 gearbox.

Like engines? Audi's 2.0T FSI turbocharged four-cylinder, the first engine to combine direct fuel injection with turbocharging, made Ward's 10 Best Engines list. It was joined there by Audi's 340-hp, five-valve-per-cylinder, 4.2-liter V8. In recent years, Audi's 2.7T bi-turbo V6, 1.8T four-cylinder and 3.2 FSI V6 engines made the list as well.

The upcoming S8 and S6 will be powered by a direct-fuel-injected V10 that will make 450 hp. The track version of the R8 competed at Le Mans the last five years and was a winner four times. And the new Audi R10 was a winner at Sebring earlier this year and is expected to be a winner this coming weekend at Le Mans. A diesel? Yep, the R10 is powered by a 650-hp V12 diesel engine.

So, Audi's problem in this market is not product, it's not design, it's not manufacturing, and it's definitely not engineering, technology deployment or product development. The only thing left to blame is sales and marketing.

Certainly Johan de Nysschen, the new head of Audi of America, can't be that candid. But he did tell me that up until 18 months ago, although Audi was a division within Volkswagen of America, it really wasn't autonomous.

In other words, while other luxury brands were free to target consumers of premium automobiles, Audi was the victim of VW's planning for the proletariat. De Nysschen knows this and his orders are to rebuild Audi of America. That includes the dealer body and its personnel, finance, efficiency, productivity, processes, marketing, sales, public relations, everything.

"We are polishing our business across many fronts," he told me. "We're already focused on using the high-quality product that we have as a platform, and we are working on a high degree of awareness in the minds of consumers."

To that end, De Nysschen is beefing up Audi's marketing and public relations staff to shape and craft "more carefully" the perception of the brand. But then he told me something that I found troubling: "Given that we have a long way to go, we can't follow our competitors because we'll never overtake them."

He was speaking about advertising and brand image. Implicit in what De Nysschen said was that Audi should find something to say about its brand that BMW, Lexus and Mercedes aren't saying about their brands. To me that's like settling for table scraps.

If its build quality is as good as Lexus, Audi should say so. If Audi offers as many creature comforts as Mercedes, it should say that, too. And if the rings in Audi's badge are what its cars will run around BMWs on a racetrack, then say that.

My point is that Audi's new brand image should be based on the attributes of its products and not on what other manufacturers choose not to say about its products. An interesting thing about American car buyers is that if you tell them something about your brand repeatedly and it happens to be true, they'll believe it.

http://www.edmunds.com/insideline/do/Columns/articleId=115