Audi Thrives Worldwide
And a suggestion for GM
From humble roots, and formerly derided by Porsche fans everywhere for partially designing the lame 924, Audi is now absolutely essential for VW’s overall financial health. It was responsible for €1.81 billion in profit on its aforementioned sales, whereas 2.7 million VW branded cars brought in €1.38 billion. Wait, Audi makes more money than VW? Yes they do, and they do it in style, having won Le Mans 6 times with the R8 (its opportunity for 5 straight victories only broken up by the Bentley Speed 8, which shared the R8’s drivetrain) and the new TDI R10. In the U.S., Audi’s sales have increased 8.7% this year, while the VW Group’s overall sales have been flat, signaling less demand for low and mid-market offerings by the automaker.
Based on the VW Passat B5 platform, the A4 gave you almost-BMW styling and almost-BMW performance with a better interior for about 5 grand less than you could touch a similarly equipped 325i or 328i in the heady days of the Internet boom and 100% employment. Additionally, and surely not overlooked by its creators, was its awesome “upgradablity” – a 1.8T engine with an upgraded ECU could easily be pushed from 150 towards 180 HP for about 200 bucks. Not only was the car a hit with those who loved the (real or imagined) safety of AWD, but also with a younger crowd of modifiers and enthusiasts stepping up from the Jetta. With this car, followed closely by the A6, the TT roadster, and the 250HP bi-turbo S4, Audi successfully joined BMW and Mercedes in becoming a “real deal luxury moniker.” Audi successfully marketed itself as a “less ostentatious” BMW while all the while cribbing the best of Bayerische (burnt orange interior lighting anyone?). Audi’s disciplined marketing concentrated on its rally racing roots, the Le Mans and ALMS-dominating R8, and high technology – all-aluminum space-frames, CVT, and FSI direct injection engines.
VW’s management of Audi presents a business case study for a particular General Motors-owned foreign label close to my heart; the perpetually moribund Saab. Like Audi, Saab vehicles are based on common platforms and engines with their corporate overlords, have a deep history of performance long ignored, and a name that probably has too many vowels or at least vowels placed together in non-standard arrangement. Then again, Saab only sells about 120,000 units a year worldwide, only 25% more than Audi sells in the U.S. alone, and has been pronounced on its deathbed by the automotive press for at least the past 7 to 10 years.
Unfortunately, Saabs are best known in the American mass market for having their ignition between the seats, wicked torque steer, and a propensity to be owned by college professors. Any time you mention to someone that you own or are thinking of buying a Saab, they say “Oh, Saabs are good looking cars, but I haven’t ever seen a dealership.” True enough, as the Saab dealer network is on life-support. Car shopping with my step-mother in Des Moines a year or so ago, we found the Saab dealer in a far corner of a Mitsubishi dealership proudly displaying approximately one dust covered 9³.
As much sympathy as I have for any owner of a joint Mitsubishi/Saab dealership, I could not in good conscience recommend a car that was so obviously unsupported. She ended up buying a Bimmer.
Not bad, no more Saabarus please
My point in praising Audi and then trashing Saab is pretty simple. GM needs to conjure Audi and its B5 A4 with its upcoming Saab launches. GM has in Saab a quirky brand with currently limited appeal that is ripe for growth in the U.S., much like Audi in the early to mid 90’s. For once, Saab has a real winner on their hands with the new 9³ and Turbo X detailed below on this blog. GM needs to quickly take advantage and create cachet for the brand not only in the United States, but internationally – particularly in Asia. Audi not only builds A4s and A6s in China, but it’s their third biggest market behind Germany and the UK and ahead of the U.S. I don’t need to point out (but I shall) that China and Russia are pretty much the only big time growth markets in the auto business right now. Add to the fact that the market conditions are actually good in the U.S. for a near-luxury/luxury launch. Lexus, BMW, Mercedes, Infiniti and Audi are seeing healthy sales growth even with recession likely in the near term and the credit markets tightening. Even dowdy old Mercedes is having a successful launch with their new C-class.
Of course, if they want to look at how NOT to launch the vehicle, Saab and GM only need to look to their Swedish friends Ford and Volvo. The have completely botched the C30 – a cool car that has gotten zero marketing support in the United States and probably came to the market about 3 years too late.
Oh yeah, and get rid of “Born from Jets.”
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