Q&A: Audi boss Winterkorn describes how the Audi and Seat brands will work together

Ingolstadt. Audi boss Martin Winterkorn says its sister "sporty" brand Seat will bring new customers to the Audi brand, in a similar way that Mini has done for BMW. Audi is also looking at new niches such as a sports car. It's also considering ways to combine back-office sales and service functions with Seat.

Q: Mr. Winterkorn, what is the impetus you hope to gain from the IAA in Frankfurt?

A: The IAA is always an incentive for people interested in purchasing a car. We believe that the new models will give Audi and Seat and other Group brands a new momentum. Something will shift, specifically as the economic situation seems to improve again. The timing for the IAA is just right.

Q: Which models are supposed to make the brand more attractive?

A: Some of the models have already been shown, such as for example the Nuvolari coupe or the SUV Pikes Peak. Also the new A3 and A8 models. The A3 five-door version and the new A6 are also models which will give the brand a more sporty image, without neglecting the brand's values, such as progressiveness and high quality. Emotional design also becomes increasingly important.

Q: Are there still lucrative niches within the market which Audi seeks to enter?

A: One is of course the large SUV sector. That is the direction our prototype Pikes Peak is pointing in. We can use some of the Group's existing modules for this. And when looking at the SUV world market there are also some interesting niches below the size of the Pikes Peak.

Q: You mean for Audi?

A: Yes. There are some interesting competition vehicles, such as for example some of the small SUVs. That is why we could imagine building a similar vehicle at Audi.

Q: Are there also any opportunities outside the SUV sector?

A: We are also working on several coupes and some other variations. I personally believe that Audi needs a sports car. It would fit into our Group strategy, from Seat to Lamborghini.

Q: The plan was to have a clean profile for the Group's sporty brands by fall 2003. Is everything going according to schedule?

A: Yes, our brands now have a very good range - this will become obvious within the next two years. The models concerned are currently being developed. The IAA will give you an idea of the direction in which we will go. We have also made progress regarding the structures and cooperation between Group brands. Walter de Silva is working on that. He is an excellent chief designer who looks ahead. Development processes are also closely interlinked. The A3 five-door version for example is design engineered at Seat, the aluminum body for the Lamborghini Galardo was developed in Neckarsulm and the V10 engine was developed in our V-modular design system. Now we are looking for more synergies regarding purchase and production.

Q: Where is more potential?

A: I believe that there is still room for improvement and also synergy potential within the sales sector. However, our line is clear: we will remain separate brands in the eyes of the customers but will aim to standardize certain areas outside the showrooms.

Q: What does that mean precisely?

A: Customer services, repair and service and anything regarding after sales. Since we have optimized purchase and production during the past few years I believe that now there is still a lot of potential regarding cost efficiency within the sales sector.

Q: What do you mean? Merging the back office areas?

A: Yes. The new block exemption gives us new opportunities to save costs. In the sales sector we have to ask the question: what is added value? What brings more value, what doesn't have any value? Dealers receive a margin because they have tasks that cost money. However there are also structures within the sales sector which have no impact on added value and which we therefore do not need.

Q: Will you in future focus more on your own dealer locations?

A: That is also an important subject, but a very difficult one. We are already running our own showrooms and were therefore able to collect some experience. However, such a big change within sales can not be undertaken in one day.

Q: There are considerations to merge the sales departments of both Audi and Seat brands.

A: There are many ideas. The question is how Audi can transfer some of its image to Seat? Customers should realize that "If I buy a Seat I really am buying a small Audi."

Q: And what will be the next step?

A: If a customer buys a Seat model his next car might even be a "real" Audi.

Q: So it is an advantage that Seat's average customers are very young.

A: That's right. I am positive that this gives us a very good starting position for a suitable strategy.

Q: One of your competitors in Bavaria has set a good example for such a cooperation.

A: I am watching closely, as they did it very well. And now someone from that company, who knows how it all works, will join us. (Editor's note: the new Audi sales boss Ralph Weyler used to work for BMW)

Q: So you are learning from BMW?

A: I believe that what BMW is doing with the Mini is very good. Of course we will need separate showrooms but I can well imagine the Seat and Audi logos on top of one roof.

Q: Will Seat products in future end where Audi products start?

A: The intersection will lie in the region of the A3. However, a Seat Leon successor will look totally different to an A3.

Q: What will the successor to the A2, which is planned for Seat, look like?

A: Have a look at the prototype Altea at the IAA in Frankfurt and you will get some idea of what the design will be like.

Q: Returning to the tough present. Will you manage your target for 2003, the promised sales record?

A: We will keep to our statement that we will sell more cars in 2003 than we sold in 2002.

Q: Will the result be a good one?

A: I am sure it will be good. However, I am not able yet to tell you if we will reach our original target figure.

Q: Would you be willing to make a forecast for 2004?

A: I do believe that 2004 will be better for us than 2003. Nonetheless there are still many risks, particularly on the international markets. However, when looking at what experts say about our cars regarding quality and design, then 2004 should be a good year for us, specifically with the A3 and A8 models, which we only just launched, and the brand new A6.

Q: How well is the first A3 model, the three-door version, selling so far?

A: Fantastically well. We will build and sell all of the 120,000 units planned for 2003. In 2004 we will have the capacity for 170,000 units of the three- and five-door versions. We will be using all of it.

Q: Lets talk about the luxury car segment. When will the Audi A8 overtake the BMW 7-series?

A: We have already overtaken BMW on several markets with our eight cylinder versions, such as for example in Germany. Globally BMW is still ahead of us, as the A8 is not yet present enough in Asia - with the exception of China - and the USA.

Q: It is going really well in China.

A: We are far above our target and will be selling approximately 60,000 cars in China.

Q: What are your goals for 2004?

A: A significant rise in sales. We are currently increasing our capacities, particularly for the A4. For Audi China will soon be a bigger market than Germany. About two thirds of our customers in China are private buyers.

Q: Audi is the Group's paragon on the US market.

A: We have a good position on the US market. Particularly the A8 had a fantastic reception - this will open the door for the A6 and the A4 even further.

Q: How many A8 are you planning to sell in the USA?

A: We are aiming for more than 5,000 units in 2004. We hope to have doubled the total Audi sales in the USA by 2007/2008.

Q: A sporty five-door A3 version will help you to do so.

A: And also the new A6 and the Pikes Peak.

Q: Has the Pikes Peak received the okay yet to go in series production?

A: All that is missing now is a formal "go".

Q: Are you still considering an A8 luxury station wagon?

A: We are still working on the option.

Q: Has your cost saving program had any effect yet?

A: We have 40 projects on the go and have had good results so far - which helped us a lot during the difficult first half of 2003. We have made great savings in development without reducing any of the new projects. And we did the same on the purchase sector.

Q: It is said that you have made savings of approximately 150 euros per vehicle...

A: That comes pretty close to it.

Q: Where will the brand group be in five years time?

A: Audi, Seat and Lamborghini will then be a homogenous structure - with Audi being a premium manufacturer and the leading brand. The weaknesses that we have in the USA and Asia will by then be eliminated.

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