Audi Oz boss: number one at a profit

Audi wants to be number one... The number one luxury brand internationally. To this end global boss Rupert Stadler stated last week the carmaker would target 2.0m sales annually by 2020 with growth via a mix of more markets, and believe it or not, still more models.

It’s no surprise therefore that Audi Australia boss, Uwe Hagen, is keen to echo his head office’s target.

Locally, the brand has demonstrated strong growth every year since 2004, even escaping the GFC-induced sales slump in 2008. In 2011 it’s on track to sell around 15,000 cars – four years ahead of its target date. Indeed, for the first half of the calendar year its run rate has it approaching 16,000 units per annum. In the financial year 2010-11, it registered close to 14,000 cars.

But despite this strength, there’s been a distinct change in attitude at the four-ringed brand’s local outpost. Unlike his at times gung-ho predecessor Joerg Hofmann, Hagen suggests his aim to be number one in Australia will not come at the cost of profitability – especially for his dealers.

Audi’s international volume and its Australian figures are serendipitously aligned... This year Audi’s international volume should top 1.5m – Australia’s, as noted above, 15,000. Does that mean 20,000 units are the brand’s new aim for 2020?

Hagen says not necessarily.

“I think the Australian market is at some points more or less separate and, if I look at our [international] strategy 2020, a lot of this growth is coming from the Asian countries,” Hagen told motoring.com.au at last week’s local A6 launch in Queenstown NZ.

“I personally think that when you’re looking into a market, you have to balance volume to the financial result of your network. The more you push the volume, the financial result of your dealer obviously is [pressured] at that point. We have seen this last year [with] this competition between BMW and Mercedes -- and a lot of pre-registered cars went into the market.

“My personal opinion is that there is still a growth potential within the Australian market [for the luxury segment], but I think, looking to the next [few] years that to become number one in the premium segment, you are doing 17,000-18,000 cars and that’s it.  And, if you have three brands which are looking for number one position… it’s getting really tough [to grow volume].”

Hagen says new models will again be the step-changers of Audi’s local volume, but existing and updated models will continue to perform.

He dismisses the suggestion that the company has concerns over the relative YTD June sales of A4/A5 and variants, despite them being well down on the same period in 2010.

“[Our growth] it’s also coming out of our new cars. A1 was quite successful in the beginning and also some other cars in smaller [volume] segments, like A7 started really well.  [The range-topping] A8, compared to the old version, went really well. And there’s still the strong impact from the SUVs: so Q5 is good; Q7 this year is brilliant.

“Next year with the launch of the Q3 we expect that there’s another [step in] volume coming in, which will bring us to the same [volume] level as BMW and Mercedes.

“But, as I said, I think you have to be really careful in pushing [for too much volume growth].  I’ve read an article, when I came back from Germany, that [now] Volvo has identified the Australian market as one of the growth markets,” Hagen stated

With 7974 cars registered in the first half of 2011, is Audi being cute with its 15,000 unit prediction then? Hagen says no... The Audi Australia boss says his organisation is carefully controlling its stock levels but: “We will be [conservative]... We have our target and the thing is there’s a worldwide demand [for production], not only within our brand, also within the group.”

“We’re really convinced that, if the market will stay stable, that we achieve these figures.  The problem is, and this was a [lesson] for me, you order a car and it will take three months to come to the country.  So, what you don’t have on stock in October, it’s difficult to sell within the year....  But we also are not interested in putting too much pressure into the stock [at hand], because this is a form of pressure then to the financial result.”

Hagen says that years of consecutive growth is yielding a higher number of repeat buyers. Thus Audi customers are more likely now to order cars for purchase – a benefit for his organisation.

“There’s also an advantage out of this limitation in production; a lot of customers now are ordering their cars and the number of cars sold directly from stocks, especially with larger cars, is decreasing.

Hagen says his organisation’s chief focus now is infrastructure – bring the backroom functions up to the level that will underpin further growth.

“Last year we were more or less 1000 cars less at the same time... More than 1000... So I think you also have to see that your organisation has to grow with you. [My focus is] After sales area and also some other things...  Because, if you don’t satisfy your customers with the after service, you can’t stay successful.”

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