VW’s Audi risks fading as European car market recovers – Reuters UK

Posted: Sunday, March 02, 2014

BERLIN (Reuters) – Just as Europe’s car market recovery shifts up a gear, the region’s biggest automaker Volkswagen will have little new to display from its luxury brand Audi at this month’s Geneva motor show, other than a niche sports car.

Audi, which accounts for almost half of operating profit at German parent Volkswagen (VW), will unveil a new version of the TT sports car, a model that accounted for less than 2 percent of the brand’s 1.58 million sales in 2013.

In contrast, rival BMW will showcase the latest model from its cutting-edge “i” series of electric cars, while Daimler’s Mercedes-Benz will present a new version of its best-selling C-Class, adding to a string of recent launches.

Having doubled model lines and deliveries over the past decade to narrow the sales gap on luxury car market leader BMW, Audi has not had much new on the stands for several recent industry gatherings compared with its rivals.

What’s more, overhauls to Audi’s top-selling A4 saloon and the Q7 sport utility vehicle (SUV), slated for 2014, will be pushed into next year as the cars need to be reworked, two VW sources familiar with the matter told Reuters.

That is leading some analysts to question whether Audi can maintain its strong sales growth of recent years and meet its goal of overtaking BMW by 2020, which in turn could torpedo VW’s drive to become the world’s biggest carmaker.

“Audi is facing a barren spell just when Mercedes looks to take the fight back to the premiums,” said Stefan Bratzel, head of the Centre of Automotive Management think-tank near Cologne.

“The current order is anything but set in stone,” he added, referring to luxury car industry rankings.


After a six year slump, Europe’s car market is back in growth as the region’s long-suffering economy recovers from a debt crisis, with sales in the European Union rising for a fifth straight month in January.

The luxury car industry avoided the worst of the downturn, thanks in part to strong demand from developing countries, and will be a key battleground as the European market recovers.

Research firm IHS Automotive forecasts Audi will briefly snatch the luxury sales crown in 2017/18, as it aims to double its line-up of popular premium crossovers that includes the Q5 compact SUV. [ID:nL2N0H11ZH]

But it expects both Audi and Mercedes to miss their goals to overtake BMW by 2020, with Mercedes staying in third place throughout the period.

BMW, aiming to stay in the top sales spot for a tenth straight year, will flaunt the i8 plug-in hybrid sports car in Geneva. Other unveilings will include the new four-door MINI Clubman concept car and the new “Active Tourer” minivan.

Mercedes, enjoying a sweet spot in its product cycle, will present the new V-Class minivan and a coupe version of its all-new flagship S-Class saloon, the brand’s top-end product.


While Audi’s new product line-up may look weaker by comparison, the significance of the latest version of the TT sports car should not be underestimated, said Jonathon Poskitt, head of European forecasting for LMC Automotive.

Developed in the mid-1990s after Audi’s ascension to the premium market, the original 1998 model won rave reviews for its curvy styling, inspired by the so-called Bauhaus design school that features simplistic, clean industrial looks.

“The TT projects a very positive image for the overall brand that’s still highly important for Audi,” said Poskitt. “It helps cement the cutting-edge appeal Audi is after.”

Based on VW’s latest modular platform designed to underpin as many as 4 million small and midsized vehicles, the new TT will feature sleek styling, lower weight and a top speed of 250 kilometres per hour, one of the VW sources said.

While it will only ever be a niche car in terms of sales, such vehicles can be essential to building a loyal fan base.

Andrew Abrahams, a UK-based travel consultant, said he was going to buy an Audi A3 compact about a decade ago but fell for a TT which wasn’t much more expensive than a revved up A3.

“I wanted a TT from the moment I first saw one. The shape and the interior were just so different but I didn’t think I’d ever be able to afford one,” said Abrahams, a member of the Audi TT Owners Club.

(Editing by Mark Potter)


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