Audi Australia growing and profitable: Hofmann

Tough-talking Audi Australia boss Joerg Hofmann is always good for a quote, but he was in particularly fine form this week.

The German national is regarded by the media as a straight-shooter. But at the media preview of the Audi R8 V10 supercar, in response to questions from journalists in Brisbane yesterday, he took a swipe at his German rivals for suggesting that Audi's recent success had come at the cost of profits.

Under Hofmann's tenure, Audi Australia has had four years of record sales growth and is on-track to post an impressive fifth year of sales increases -- despite the overall market decline. However, the company has not made public its financial results in recent years and this has fuelled speculation that the operation is "buying" market share by selling cars at hugely discounted prices.

Hofmann refuted all of those suggestions in a frank exchange with a small group of media this week.

"These people [rival makers] they are bit desperate sometimes, they can't understand why we are so successful," Hofmann said.

"Fair enough, we can smile about it, because we overtake them all very soon.

"They start throwing dirt and say we discount and whatever kind of crap comes to their mind, I mean I'm bored about it. We just move on and in two or three years we are ahead of all of them."

Audi is desperate to overtake BMW and Mercedes-Benz in Australia in the sales race, or at the very least get within striking range of their sales figures, to better reflect how Audi competes with its German rivals in Europe.

Audi plan is to sell 15,000 new cars locally in a full year by 2015. But Hofmann contends that mark will be hit early.

"I can't tell you exactly when, but I can tell you we will [reach this target] earlier," he said. "We are already ahead of target."

He said eight of Audi's 34 national dealers already outsell the other German rivals in their area.

When asked if Audi Australia was profitable, Hofmann said: "We will have the most profitable year this year. We will achieve our financial budget to Germany by more than $1 million. That is, Audi Australia will make $1 million more profit than was in the plan."

Hofmann said that when he took over the top job four-and-a-half years ago, Audi Australia was not profitable.

"It lost money. Two years later we reached break-even, two years earlier than anticipated," he said. "And in the meantime for the last two years we are on a solid, profitable path."

The comments come as the brand is about to open the world's biggest Audi dealership, a $50 million monument on the freeway between Sydney airport and the city.

"You can only build new dealerships, invest in brands and do sponsorships and whatever if you're profitable," he said.

The outspoken Audi boss claims, contrary to industry speculation, his dealers were more profitable than the industry average.

"You can't make profit if you discount," he said.

"All our dealers make money. Our dealer average return on sales is above two per cent, even in the [financial] crisis. Our benchmark dealers are [making] between three and four per cent [profit on turnover]."

He also pointed out that the latest dealer satisfaction survey ranked Audi as one of the most favoured new-car franchises.

"In 2004 the Audi franchise was certainly not the most attractive one, and we were 20th, 24th, 18th, something like this. And now we are number one or number two."

When asked why the dealers were so happy, he said: "Our dealers make money. A dealer has to make profit. If he makes profit he is able and willing to invest and then he is happy. And this is reflected in dealer satisfaction."

Does this mean Audi customers should haggle harder?

"You can't say that. They pay a price for what the product is. We are certainly not over-priced," he said.

"What you should not forget, the development of our cars is a very expensive exercise. The quality of the materials, etc, is more expensive than a Korean car. And you have to pay the price for that. If you don't care for German engineering then you can buy a cheaper car."

Hofmann also took the opportunity to answer critics who say that the growth has been driven by a wave of new models. Almost every model in the Audi range has been updated or replaced by an all-new model in the past four years, and at least three all-new models have been added to the range.

"Audi has always had great products, even five or six years ago," he said.

"The problem was the brand was not perceived the way it should be. The marketing was wrong, the dealership was wrong, the organising of the people was wrong. These are the factors we fixed when we took over the business here in Australia."

Hofmann said Audi would continue to post record sales this year and next.

"If we crack 10,000 [sales] this year, which I believe we will, then I think it be very unlikely we will get another year of 30 per cent growth [next year], because the base gets higher and higher," he said. "But I certainly tell you we will have another record year next year. I'm very confident."

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