Audi predicts tough year

Audi is hoping that the launch of 20 new or facelifted models this year will help it counter a host of challenges, including the self-inflicted wounds of two emissions-cheating scandals.

Speaking at yesterday’s annual shareholder meeting, CEO Rupert Stadler insisted it expects to break its sales records even in “extremely challenging” conditions. Audi fell behind both BMW and Mercedes-Benz in global sales in 2015, despite selling a record 1.8 million cars and SUVs.

But while the business of selling cars was high on the agenda, the business of cleaning up the diesel emissions scandals clearly weighed heaviest on the board’s minds.

“Rules were broken and ethical boundaries have been transgressed,” Stadler admitted.

About 20 per cent (2.3 million cars) of the 11 million Volkswagen Group cars affected by the Dieselgate cheating scandal were Audis.

In its subsequent investigations, the US EPA then uncovered another, similar, software-related cheating scandal on the Audi-engineered 3.0-litre V6 TDI engines fitted to 85,000 larger Audi, Volkswagen and Porsche models.

“Our outlook for this financial year includes a number of negative indicators,” Stadler admitted. “The burden resulting from the diesel issue has not been resolved."

Audi has set aside €228 million to deal with the technical and legal fixes for both scandals. The figure is far lower than the Volkswagen Group figure because more than 90 per cent of the Dieselgate Audis used the 2.0-litre TDI, which needs only a software fix. The more complex repair to bring the cars into emissions compliance only applies to a relative handful of 1.6-litre TDI A3 models.

Audi is having another good sales year, though, with its April volumes up 7.5 per cent globally, to 164,350 cars and SUVs, with 620,100 cars sold year-to-date to the end of April.

With the profit from Audi’s (and Porsche’s) richer model mix critical to the Volkswagen Group’s survival in the Dieselgate crisis, Stadler predicted Audi’s profit would be between eight and 10 per cent of its revenues.

Expenses from the Dieselgate and Takata airbag scandals pulled Audi’s 2015 operating profit down to 6.1 per cent, to €4.84 billion ($A7.52b).