Audi’s Philadelphia campaign – Automotive News

Posted: Monday, June 06, 2016

DEVON, Pa. — Last year, in its first year in business, Audi Devon sold 1,032 new vehicles from its gleaming, 55,000-square-foot store in this tony Philadelphia suburb.

That volume was ahead of the local BMW dealership and approaching the neighboring Mercedes-Benz dealership, said dealer principal Alex Hanna. And it would have been unimaginable at Hanna’s previous location, about 7 miles south in Edgmont.

“We were a very small dealer, a mom-and-pop store,” said Hanna, whose late father had run the business in Edgmont for decades. “We felt that we needed to either go big or get passed by in this business.” 

Hanna’s migration to Devon, located in Philadelphia’s prestigious Main Line corridor, is part of a dramatic overhaul of Audi’s retail network aimed at strengthening its competitiveness in greater Philadelphia’s luxury market.

Of Audi’s eight dealerships in the area, five have built facilities using Audi’s “Terminal” dealership design program since late 2014 — two of them in new, prime locations. Of the remaining three, two are planning relocations and Terminal-style buildings.

And similar overhauls are occurring in other major markets nationwide as Audi positions itself to join Lexus, BMW and Mercedes-Benz in the highest tier of the U.S. luxury-car market.

“We see this across the country,” Audi of America President Scott Keogh said.

The mobilization is grand in scale. Audi dealers nationwide plan to invest about $1 billion in new facilities by the end of the decade, after already investing $1 billion from 2007 through 2015.

The results are showing up in the sales tables, where Audi is riding a 65-month streak of record sales, having notched a 1.6 percent gain for May. (Among the top seven luxury brands, it’s the only one that’s ahead for the year.) From 2011 to 2015, Audi increased its share of luxury vehicle retail registrations in nine of the top 10 largest metro markets for luxury auto sales, according to IHS Automotive, with Philadelphia showing the strongest increase.

Tom Libby, an analyst with IHS Automotive, says the share gains in the relatively stable luxury market are significant and show that Audi is increasingly separating itself from second-tier brands such as Acura and Cadillac and moving toward the leaders: BMW, Mercedes-Benz and Lexus.

“There are a lot of luxury brands who would like to be among the leaders,” he said. “Audi has shown that they have succeeded in that, and it’s impressive. They need to just keep going in the same direction and not change their strategy.”

Keogh says the ultimate goal is not necessarily to be the No. 1 luxury brand in U.S. sales but rather to do enough to deserve a top-tier position.

“Without a doubt we want to be the best,” Keogh said. “We’re starting to check the boxes of being the No. 1 brand. We do think there is more room for Audi to grow.”

Just look at Philadelphia, which went from being one of Audi’s weakest major metro markets to one of its strongest. Sales in the market through May are up 17.6 percent, Audi says, more than quadruple the brand’s 2016 nationwide gain. And the brand’s 13.4 percent share of luxury sales in Philadelphia is its best showing nationwide, up from 6.4 percent in 2008, when the first phases of the overhaul began, Audi says, citing Polk data.

The Main Line

Audi engineered its turnaround by zeroing in on a corridor of wealthy northwest suburbs known as the Main Line, and the section’s main drag, Lancaster Avenue.

Mike Brairton, Audi’s area general manager responsible for Philadelphia, called the Main Line the “epicenter” of wealth and luxury-car customers. But for years, unlike BMW, Mercedes and Lexus, Audi had no presence on Lancaster Avenue. In fact, it had nothing in the entire region that could match its competitors’ stores. For example, in 2008, no Audi dealer had a covered service drive.

“We were looking at the fifth- or sixth-largest luxury-car market in the United States,” said Brairton, “and our performance as well as our presence in terms of how we show ourselves to customers was definitely not up to the level of our competition.”

Back then, well-heeled Main Line residents who wanted an Audi could go to Hanna’s location in Edgmont, about 8 miles south, or dealer Jerry Miller’s store in Conshohocken, a steel town about 6 miles north of the Main Line.

Congested roads make driving even such short distances a chore. And for many Main Line residents, Audi’s previous locations may as well have been the backcountry.

“If you were a well-to-do Philadelphian,” Brairton said, “you’re not going to go to Edgmont to buy a car. You really don’t go to Conshohocken either, even though it’s only six miles away. You just don’t go there because that’s not where people on the Main Line shop.”

Miller, president of MMCO Autos, finally secured a Lancaster Avenue foothold in late 2008, in the eastern Main Line town of Wynnewood. Miller says he had wanted to open an Audi dealership in Wynnewood since the mid-1990s to tap into the pool of wealthy buyers there.

“I went and grabbed it so that Audi would have to do business with me,” Miller said.

Since then, Miller has opened a second Audi dealership in West Chester, and put up a Terminal building at the site in Wynnewood. Earlier this year, he ended sales at the Conshohocken site even though it had been the perennial top-selling Audi store that serviced the Main Line, retaining it as a service outpost.

“I do believe in what Audi’s doing with their growth,” he said. “I wanted to be a part of it, and that’s what I had to do to become part of it.”

Miller was Audi’s top-volume dealer in the Philadelphia market last year, selling more than 2,200 vehicles from his then-three stores.

7 acres for sale

Once Miller was situated on the Main Line, Brairton says, he turned his attention to the Hanna family. Roughly six years ago, he began talks with Alex Hanna and his late mother, Mary Lou, about the future of their Audi franchise in Edgmont, where it shared real estate with a Volkswagen dealership.

Brairton said the Edgmont location was between two markets with huge potential — Chester County to the south and west, and the western end of the Main Line to the north.

“Right now, you’re in the middle,” Brairton recalled telling the Hannas, “and you’re equally inconvenient for customers in both markets.”

Relocating to Chester County seemed the most likely choice — that is, until Mary Lou Hanna suggested a better option.

She learned a friend had commercial property for sale on Lancaster Avenue in Devon, at the western end of the Main Line — more than 7 acres, an “unheard of” size for the area, Brairton said.

“It was kind of as plain as the nose on your face that if we could pull that off, it would be the home-run move of all time to get ourselves onto Lancaster Avenue in Devon,” Brairton said.

Alex Hanna said the family bought the property in 2011, and opened the store in December 2014, for a total investment of more than $16 million. The next year, sales shot up 68 percent.

“Before, we were a mom-and-pop dealer,” Hanna said. “We really provide a luxury experience now, which is real competition for Mercedes and BMW, and the people are coming.” c

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