There's no denying it: Audi is on a roll.
Last year the German luxury brand found itself in the unenviable position of phasing out one of its U.S. best sellers -- the A3 five-door sportback -- with no replacement coming until 2014.
Nevertheless, Audi of America's sales were a record 158,061, up 14 percent. U.S. executives used the launch lull to start an advertising campaign, cooked up by Venables Bell & Partners, intended to introduce Americans to Audi's family of diesel-fueled SUVs and sedans.
Diesel has become a key differentiator for Audi -- a technology choice that Audi executives describe as more sensible than the hybrid and plug-in cars favored by some of its rivals.
But this year Audi of America will once again have new sheet metal to show. U.S. dealers will get a new family of compact cars this spring, including the redesigned A3 sedan and convertible, the high-performance S3 and the plug-in hybrid A3 e-tron sportback.
A compact crossover called the Q3 will follow around the end of 2014.
Staff Reporter Gabe Nelson spoke with Carl Sewell, chairman of the Audi National Dealer Council and an Audi dealer in Houston, about the brand's outlook for 2014.
Q. How did Audi dealers fare in 2013, and what do they expect in 2014?
A. 2013 was the best year in Audi's history in North America, and 2014 should be significantly better.
The most exciting thing in 2014 will be the new A3 series, and as they begin to roll out in 2014 and 2015 that should substantially increase Audi volume.
How much of an increase in volume?
I would anticipate at least a 20 percent increase in sales at our dealership, though that does not necessarily apply anywhere else.
How do you think the A3 line fits into the Audi lineup?
They are beautiful cars. They are set in at a price point that will be very competitive with their Import High Group competitors. Everybody is thrilled and excited and very optimistic.
What are you expecting from the Q3 crossover that arrives at the end of 2014?
Obviously, the SUV segment is the fastest growing segment in America, so that's a very important part of our growth, as is the construction of the plant in Mexico where they will build the Q5 [starting in 2016].
Where are dealers making their biggest investments to handle Audi's growth?
It's just growth. The Audi dealer network is increasing its capacity dramatically as we increase the volume. You have to add more space for salespeople. 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.
How has the new "Terminal" store design been received?
They're not unreasonably demanding growth. It's not whimsical in any way; it's very thoughtful and very well planned out. We are expanding our dealership in Houston, and I thought their planning process was excellent.
Have dealers been able to get enough Audis, including the SUVs?
Audi dealers continue to have more demand for the SUVs than they have supply, but we continue to see a growing demand for all our Audi models. They run at a low days' supply. I've been around a long time. I've watched different brands grow and shrink, and there's a wonderful growth curve going on at Audi.
What makes that possible?
They're part of a very large company that has a great tradition of engineering, technology and design, and they are also very successful on three continents. They have the shared engineering knowledge of the entire Volkswagen Group, which includes Porsche, Bentley, VW, Lamborghini and so on. I think all that, brought together in one brand, makes Audi very powerful.
What have the executives at Audi of America done with that power?
One of the few benefits of getting old is the historical perspective -- it's not my first rodeo, as we say in Texas. And these guys are really good. ... They don't abandon support of one market segment to introduce another market segment entry. They're not abandoning their A6, A7 and A8 to introduce the A3 and Q3. That is a very strategic, wise choice.
They are increasing education and training at a very high level. They are thoughtfully planning the growth of the capacity of the dealer network. And there is a tremendous focus on customer service. And that's the essence of how you build and grow a business.
Will there be any changes to Audi's bonus program for 2014?
There are some minor tweaks, but there are no financial changes. They continue to lift the expectations for customer service and they continue to lift the expectations for sales.
Have there been any major policy changes lately?
One of the great things that Audi has going for it is its continuity of leadership with [Audi of America President] Scott Keogh and [COO] Mark Del Rosso and [director of after sales] Peter Donnellan. Those three guys have been very important to the success of Audi. [Former Audi of America president] Johan de Nysschen was an important part of that team, but these three folks did most of the heavy lifting then and continue to do an outstanding job.
What are Audi and its dealers doing to provide a better customer experience?
There is a tremendous focus on education and training within the dealer network. Some of it is digital, a lot of it is in person -- just continuing to improve the knowledge and capability of the dealer organization. That's the biggest focus that you see.
Obviously product is hugely important, but the focus is on developing the dealer network's knowledge base, so that we can render the highest quality sales and service experience for our customers.
What do you think of Audi's national advertising?
It's terrific. As their budget has increased, they've been able to be in more places. I think their Internet marketing is excellent. Very sophisticated, very well focused on the younger market.
I think they have a sense of the digital world so as they introduce the A3 and the Q3, they will be right on target.
If you look at the demographics of Audi, they're running 10 to 12 years younger than their competitors, and I think this helps with that.