Audi boss says farewell... to sales leadership too

After five years of declaring a sales war on his German rivals, the out-going boss of Audi Australia has announced a cease fire.

The Managing Director of Audi Australia, Joerg Hofmann, is about to swap summer in Sydney's Balmoral Beach for winter in Bavaria to oversee Audi sales in Germany. And he's taking his wife and two boys -- and the family dog called Sydney -- with him.

But before he leaves mid January he had a parting message for his colleagues: Audi Australia no longer wants to chase luxury market leadership at any cost.

At the launch of the Audi TT RS sportscar and S5 convertible in Sydney on Tuesday December 15 he told a media gathering: "I don't wave the white flag. [But] I think this is just what you redefine. The number one premium brand doesn't necessarily mean at the end of the day you take the volume leadership.

"I think if you're on a 15,000 or 16,000 [annual sales] level ... you are pretty much in the competitive set ... the top group.”

These latest comments are in stark contrast to those made less than six months ago. When asked about accusations that Audi was 'buying' market share with heavy discounts, he told a table of journalists: "These people [rival makers] they are bit desperate sometimes, they can't understand why we are so successful. 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.”

There is no doubt Hofmann, a former reservist in the German military, has driven Audi to remarkable growth. Sales have tripled in five years, from 3500 in 2004 to more than 11,000 this year.

This year Audi sales are on track to grow by a massive 20 per cent in a new-car market that is down by about 10 per cent.

Hofmann said Audi expects to reach 15,000 annual sales by the end of 2013 -- two years ahead of target.

However, by comparison Audi's rivals BMW and Mercedes sell about 17,000 and 18,000 vehicles a year respectively.

BMW Australia boss Stavros Yallouridis told media last month that he expects BMW to sell 20,000 cars by 2015. It was the first time a German rival came out and matched Hofmann's bold statements about sales targets.

Hofmann has since changed his tune, by lowering sales expectations of Audi -- and possibly other brands.

"We are increasing our volume dramatically every year [but] I would rather leave it at about 15,000 cars per year and not stretch us even further," Hofmann said. "I know that another German brand just announced that they want to go to 20,000 cars ... but I believe that a premium brand needs to have a certain exclusivity."

He said the Australian luxury market is only about 60,000 cars per year. "And if you're all running for 20,000 the market has to grow maybe to 100,000 cars a year, which I think will not happen. If it happens, it just happens at the expense of price and discounting and image. That is why I would never stretch us for pure volume sake."

He said he believes other luxury car makers will reach the same conclusion. "I believe what will happen is that everyone will come to the same conclusion and they will stop going for volume.

"The beauty about [Audi] is we can challenge, we are still chasing, which is a lot of fun, and the others are already at ... a mature volume. It's almost like a strategic trap. Where do they go now?

"The crazy discounting starting from [competitors] is not sustainable. I think sooner or later someone in Germany will say [to their Australian management] 'Hey, hang on. Forget about your volume, I'd rather produce reasonable money again if you want to invest'."

Hofmann said he was sad to leave Australia, but after five years it was time to go.

"When I came to Australia I thought I'd be here for something like two or three years or so," he said. "Five years is actually a pretty long time in my position. And so now finally the point has come where I have accepted an offer from our board and I'm moving on."

He said his Australian experience was the best time of his life both professionally and personally. "I told my family it doesn't get better than this. But hopefully the best is coming."

He said he needed a new professional challenge and an invitation to boost Audi sales in Germany was a golden opportunity. Audi sales in Germany year to date are down by 6 per cent.

He's already planning to trump his greatest achievement in Australia: the Audi Lighthouse in Roseberry, until recently the world's largest Audi dealership. He's planning on building another mega dealership in Frankfurt that would assume the mantle of Audi's biggest.

"I can't stay forever in Australia," he said. "The job really was getting too small, without being arrogant. It's just I need a new, bigger challenge, I need to prove myself in another challenge. The job the board offered to me is a great opportunity to show what can be done. Germany is still the biggest market for Audi worldwide, ahead of China. It's a very competitive market.

"I was sent down to get the Australian business under control. I think it's not too bullish and it's fair and true to say this mission has been accomplished.

"Over the last five years, we tripled sales, we tripled market share. We have 60 months of record sales in a row, which is amazing, I have to say, looking backwards."

He said Audi's dealer network has been restructured and up to eight new Audi showrooms are due to open next year.

"It's all done. I wouldn't even know what more I should do over the next couple of years here. So I believe I can say ... my job has been done and I need a bigger challenge."

Hofmann quickly earned a reputation for being a straight-shooter with the media. But he admitted for the first time it was all part of a plan to grab headlines.

"I gave you [the media] a few things to write," he said. "It was always part of the strategy. We had to create awareness for the Audi brand either way. Five years ago the brand was not perceived anywhere. And you have to start talking about the brand in order to get awareness.

"It was part of our plan to talk about Audi and our future more offensively and it would have totally backfired if it didn't work [sales didn't increase]. But I was confident it would work, and of course it worked better than we thought."

Hofmann, 42, says he will take with him fond memories of Australia, including its dry sense of humour, and an unexplained passion for Jimmy Barnes music.

"Hopefully I can bring back the Australian dry sense of humour. I really like it. Hopefully it makes the Germans a bit more relaxed when I go back. But after five years of being here, you have to be careful because you can lose a bit your German way.

"You get used to the local [Australian] culture, and really it's time for my family to re-establish their roots in Germany."

Audi Australia is yet to announce Hofmann's replacement but it will be an executive from Germany. "It's a German man. But we don't talk about it yet," he said.

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