Audi’s U.S. Prospects Boosted by Rising Quality, Residuals
October 18, 2007

By Bill Visnic

WASHINGTON, D.C. -– Audi of America Inc. is reinventing itself, and early results show a surge that would make President Bush proud.

At the end of September, Audi’s U.S. sales were up 9.4 percent versus 2007, in a year that will be a sales disappointment for many automakers. Surging sales are the symptom of Audi’s quiet but focused brand boosting initiatives –- the company is swiftly overcoming perceptions of poor quality and substandard resale values, bugaboos that have dogged Audi for the better part of this century.

Several Audi models, for example, climbed to “above average” or better ratings in the latest Annual Car Reliability Survey by influential Consumer Reports. And Marc Trahan, Audi of America’s director of quality and technical services, says the company is hoping for similar upswings in other key quality metrics.

Equally important, Trahan says Audi’s improved products are reversing the long-held reality that owners can expect lousy resale values. Trahan presents data showing that on a sales-adjusted basis, Audi, as a brand, has better resale value in 2007 than prime European competitors BMW and Mercedes-Benz –- and another luxury-car heavyweight: Lexus.

Trahan says the result is largely due to the strong resale performance of the A4, which is the brand’s best-selling model by volume. And he admits “we still have work to do,” with other models. But he notes the A6, a perennial residual-value laggard, has enjoyed serious improvement: Trahan tells AutoObserver the resale value of an ’05 A6 is a heady $5,000 more than an ’04 model.

Audi, in the midst of a major addition to its U.S. product range that includes the sleek new S5 coupe, the TT roadster and convertible and the midengine R8 exotic this year and the all-new replacement for the crucial A4 in the third quarter next year, also has added 11 new exclusive dealers this year, bringing its total to 110 exclusive points. Those exclusive franchises, which Audi covets to reinforce its positioning as a premium brand, now account for about 63 percent of Audi’s U.S. sales, says Trahan.

Audi also says its new Q7 crossover is proving to be a strong conquest model. In convincing owners of other brands to buy Audi, the Q7’s 63 percent conquest rate tops the Mercedes GL and the Porsche Cayenne.

Meanwhile, Audi also is in the midst of relocating its headquarters, along with parent Volkswagen of America Inc., from suburban Detroit to Herndon, Virginia, in a move that it says will bring the company closer to a larger number of its customers. Audi sources say the building, in an office park near Virginia’s Dulles airport, is nearly finished and much of Audi and VW’s personnel moving to the area should be in the new location by next summer.

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