Audi Chief Warns of Higher Prices
June 23, 2008
Audi's chief executive Rupert Stadler told the Financial Times in Monday's edition that the Volkswagen luxury brand "would be prepared" to raise prices next year if current cost trends continue and if competitors raised prices as well.
Carmakers are facing intense profit making pressure from higher commodity prices -- steel has doubled, increased technology costs for cleaner, more fuel-efficient powertrains and, for Europeans especially, exchange rates. At the same time, sales in developed markets are soft.
Audi Chief Warns of Higher Prices
"If prices remain on this high level, the pressure for sure is increasing for everybody," Stadler told the London newspaper. "The real burden is not to be seen in 2008. The big question is what is coming in 2009."
Most carmakers are hedged for these risks but they will face bigger pressures on their margins next year when hedging opportunities are expected to be less attractive, Stadler said.
The paper pointed out that while automakers rarely signal price increases, Audi's admission is especially noteworthy since the profitable premium brand is seen by analysts as better-placed than most others to withstand tough markets because it pools many costs with its parent group.
Automakers, as reported by AutoObserver, already have been raising prices -- or hiding those price increases in higher delivery fees. Audi and BMW are among those raising prices.
One analyst quoted by the paper said automakers may have to raise prices another 5 to 10 percent to cover their costs. But, the analyst said, the manufacturers could risk giving up sales volume that would result in under-utilized factory capacity.
Stadler also told that paper that Audi might launch a plug-in version of its planned A1 model, or in its A4 family of cars, which also include the Q5 small sport-utility vehicle and the A5 coupe.
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