Audi dealers have invested heavily in their stores to handle the luxury brand's rapid U.S. growth -- and they're not done yet, says the chairman of Audi's dealer council.
Carl Sewell, an Audi dealer from Houston, is well-known in the industry for his book Customers for Life, a guide to customer service that has sold more than 600,000 copies. One of his main points of emphasis on Audi's council has been the need to prepare for a growing number of vehicles in service.
Audi had a record 158,061 U.S. sales in 2013, nearly double the 2009 figure. Sewell says he expects annual increases of 10 to 15 percent for the foreseeable future.
With growth like that, "you have to add more space for salespeople," he says. "You have to add more space for display of cars. You have to add more space for inventory parking. You have to add more space for service drives and service bays and parts departments."
Audi dealers who expand stores are required to upgrade to Audi's latest store design concept, known as "Terminal." Image programs often frustrate dealers, but Audi's process is "not whimsical in any way," says Sewell, who is now expanding his Houston store.
"It's very thoughtful and very well planned out," he says.
Speaking to reporters this month, Audi of America President Scott Keogh said he is "overjoyed" with dealers' progress on store expansions.
The proof of their confidence, he said, can be seen in the blue sky value of Audi franchises, a measure of intangibles such as goodwill, usually expressed as a multiple of pretax profit. Audi claims to have a blue sky multiple of seven, meaning that the cost to purchase a store is seven times pretax profit.
That puts an Audi franchise among the most valuable; BMW, Mercedes-Benz and Lexus historically have led the way with blue sky values between six and eight.
"It's all about returning the capital," says Mark Del Rosso, COO of Audi of America. "When [dealers] decide where they're going to park their money in order to get that return, the first brand that they're looking at is Audi."