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NEWS
Audi's Aussie sales vacuum
Prestige importer sees plenty of growth potential in local marketAndrew Doyle, the managing director of Audi Australia, is confident the brand will continue growing in Australia.
That thinking is based on a signature quirk of the local market. Prestige vehicles account for 15 per cent of the market in the UK, says Doyle, but are under-represented here, where sales amount to around "six or seven per cent."
Audi is pulling its weight to increase the prestige share in Australia, however, currently running third in sales behind Mercedes-Benz and BMW. The company has set new sales records each year since 2004. VFACTS figures reveal Audi sold 16,009 in 2013, an 8.3 per cent gain for the brand year on year.
There's still room to grow in the local market, however, according to Doyle, who has previously revived the prospect of Audi moving 20,000 units per annum in Australia.
Some growth is expected to occur through strategic tweaks to the dealer network. The company plans to open new dealerships in Hobart (June), Bendigo (August), Brisbane West and Doncaster (both December), with Sydney's service centre due for expansion in September and Melbourne to be revamped in November.
Audi is campaigning on numerous fronts in Australia, running high profile marketing initiatives with brand ambassadors and sponsored cultural events, for instance, or introducing new products to minimise the ravages of the Luxury Car Tax (LCT), or holding off aggressive competition from other brands.
In the case of the LCT, Doyle believes that many Australian buyers cleave to a long-standing preference for cars with cachet and comfort, but they're deterred by the added cost of cars incurring the LCT.
"If there was a more competitive proposition and less punitive taxes on premium cars, it would certainly be great for us – volume-wise – but great for the Australian consumer [also] and the car parc in Australia as far as efficiency and safety generally," he said last week.
Nevertheless, the LCT alone doesn't explain the business environment holding back prestige sales in Australia.
"It's not all LCT, but I think it's obviously a strong proportion, with more than 30 per cent tax... It's a major driver in that," said Doyle.
It's estimated that 55 per cent of Audis sold in Australia incur the Luxury Car Tax, which is a 33 per cent impost on cars priced above $60,316. That's a lot of tax being collected, and the ATO (Australian Taxation Office) has just closed another loophole for prestige car buyers.
The fact is, however, that more than half the Audi buyers in Australia are willing to accept the government skimming something off the top of the purchase price – as an adjunct to acquiring a prestige car built to an exacting specification.
Since 2009, Audi has added new models to its range, for the purpose of minimising the tax, either in part or fully. This has been accomplished by two measures – pricing the cars below the tax threshold, or importing vehicles that consume fuel at a rate below 7.0L/100km to earn the green car dispensation.
With the importer promising more products to sidestep the tax – such as the A3 e-tron due in the first quarter of next year – customers' exposure to the LCT is expected to lessen over time.
As far as competitors are concerned, Audi seems to be playing the game better than some. As an example, the A3 remains second only to the Mercedes A-Class in the segment for the year to date. VFACTS figures place the Mercedes in front (1301 for the A-Class, 1022 for the A3), but the release of the new sedan may see the A3 ahead of the Mercedes – albeit with a body style the A-Class doesn't offer in the same segment.
Doyle is sanguine about the small-car contest.
"Certainly the A-Class is a nice car and it has done very well in volume terms. At the same time however, our A3 has improved considerably. I think the whole segment is growing and it's fiercely competitive in that segment; we enjoy the competition..."
"There's nothing wrong with competition. Good luck to them and good luck to us. And I think it's good for the consumer, they have great choice, don't they?"
Globally, Audi is claiming number one spot among prestige brands, selling 1.575 million vehicles last year and achieving an operating profit of €5 billion. The company hopes to achieve €22 billion by 2018.
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Written byKen Gratton
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