For the past several years, Audi of America Inc. has been concentrating on improving quality and expanding its range.
The results are showing. Audi's U.S. sales were strong last year, benefiting from the replacement A4 and A6 and the new A3 small car.
Jerry Nelson, chairman of the Audi National Dealer Council, says dealers are eagerly awaiting this year's launch of Audi's first SUV, the seven-seat Q7. It's a vehicle that Audi buyers have been asking for, Nelson says.
Despite improvements in quality and customer satisfaction, Audi still is struggling to have the same image in the United States as BMW and Mercedes-Benz. It's on a par with the two brands in Europe.
Nelson says that with the new high-performance products coming, "Audi will be repositioning itself."
He says, "The goal will still be to be the best value among the European high-line cars."
Nelson was interviewed in January by Staff Reporter Diana T. Kurylko.
What is Audi's hot product?
Both the A4 and A6 came on strong. December sales volume was 8,842 cars - that was a 15.6 percent increase over December 2004. Audi sold 83,066 vehicles, which was a 6.6 increase over 2004. Their target was 84,000, and after a slow start they came on very strong.
Why the A4 and A6?
They were both completely restyled, are very competitive vehicles, and both had good leases.
What's not hot?
The Audi TT slowed up - both the coupe and roadster. We know we have a new vehicle coming; they haven't given us a date. That's a niche vehicle, which doesn't sell in large numbers to begin with, but it's a good image vehicle for us.
Your vehicle range has been renewed. Is Audi positioned well for increasing U.S. sales?
Absolutely. We have an A3 smaller car that we haven't had before. The A4, A6 and A8 have all been restyled. We finally have a sport-utility coming this summer, which we never had. The first ones should arrive in June with the V-8 engine, and the V-6 will follow in three months.
How has the A3 small car been received?
It has been received well, particularly on the West Coast.
To whom does the A3 appeal?
It is definitely a younger person, and we are being shopped primarily by VW and BMW owners, as well as some earlier Audi customers. We are definitely getting crossover sales on the vehicle. The car is fun to drive, and that's the appeal, and the price is right. BMW has not brought in their 1 series. Mercedes has not brought in their new B-class car. Audi has forged new ground with this vehicle in the marketplace.
What kind of reception do you anticipate for the full-sized Q7 SUV? Will its size matter considering the price of gasoline?
Based on our initial response, the interest has been substantial. Perhaps we'll get 20,000 (nationwide) in the first full year.
There hasn't been any sensitivity about gas. It has not been an issue at all. Our questions are whether a buyer can get the V-8, which will have 350 hp, or the V-6 with 240 hp. Our initial orders are "for whatever you can get me." I think the V-6 will eventually be the volume vehicle. People want to know when we'll get it.
Are A6 sales going well? Have you made up for the slow introduction in 2004?
Yes, absolutely, we have product shortages. I need A6s now. The last four months of last year Audi had record sales because of the leases we came out with in September. Now our leases are in the ballpark, and Audi sales zoomed at the end of the year.
What will the R8 super sports car do for Audi and dealers?
I think it will be a wonderful car for the image of this franchise. That is the one thing that Audi has lacked.
When does the R8 go on sale, and how much will it cost?
They haven't given us a date. They indicated prices will be in the $100,000 to $125,000 range. It will first come with the 420-hp RS4 engine.
What vehicles that aren't sold in the United States could dealers sell here?
The diesels. I have driven the A8 4.2-liter diesel, which has incredible torque. I have driven the A6 3.0-liter diesel in Germany and the A4 and A3 diesels. They don't smoke. They are quiet and get phenomenal fuel economy. They are wonderful vehicles.
Will they come?
Audi is working on it, and this requires a huge investment for them. The sulfur in fuel is being cleaned up. It's the right time for these products.
How will the hybrid Q7 do, and when will you get it?
There has been no confirmation on the hybrid Q7. I have mixed feelings about hybrids. How do you replace the expensive batteries and deal with two engine sources? My own feeling is that diesels are the immediate answer, tried and proven on the highway and around town. I am torn. Some of these hybrids are being sold at full sticker and above. I don't know if that's the ultimate answer.
What challenges do Audi dealers face in the next year?
Our challenges are getting ready for the increased volume the Q7 will bring and for those who haven't yet, they should consider upgrading their facilities.
What is the top priority of the dealer council in 2006?
It is to continue the road to increased profitability because that has begun, and it's great.
Audi really turned the corner in the middle of (last) year when the lease program changed. We became very competitive with BMW and Mercedes in September; it was like somebody flipped the switch, and we had a great buy and a great value.
Does Audi listen to its dealer council?
Absolutely. There was a huge change in attitude when Johan de Nysschen came on board as head. With the change at Audi of America, we have seen an openness we have not seen in a long time. He gets the credit for that.
What is the No. 1 thing the factory can do to help dealers?
Continue with the competitive leases, which will help lead to dealer profitability and help support the new facilities.
What are the dealer council's top concerns?
No. 1: Continue to increase dealer profitability with better trading margins, better leases.
No. 2: Increase marketing to gain share.
No. 3: Carry out a successful Q7 launch.
How is the factory responding to those concerns?
The factory has been responding positively. They are doing smarter marketing - "acupuncture" is the term they use. We have a new Dealer Advertising Association Group that begins this month. They previously did this in key markets, and the groups are being reformed.
The other thing on the wish list is competitive leases, which will lead to dealer profitability. All the European manufacturers have been under extreme pressure because of the euro/dollar to get their costs down. They have become careful in the warranty area, they have tightened their allowances.