Audi has a chance to overtake Mercedes-Benz this year for the first time with new-car sales of “more than 1.2 million” – while Mercedes is aiming for about 1.25 million sales. VW's premium brand is posting record sales and profits, helped by a big product offensive and growth in China and the U.S. Audi CEO Rupert Stadler still sees lucrative niches that the brand could fill. The Audi range could grow to 50 models, Stadler says. But the company's ambitions don't stop there. Its goal is annual sales of 2 million cars by 2020 and the brand also aims to be the premium leader in sustainability and innovation. Stadler outlined Audi's ambitions to Automotive News Europe Editor-in-Chief Harald Hamprecht.
Audi has the chance to overtake Mercedes this year in sales and has high profit goals
Meet the boss
Unlike most CEOs of German car companies, Rupert Stadler does not have a background in engineering, having instead studied business management. But since becoming Audi CEO in 2007, the native of Bavaria, Germany, has presided over a period when the Volkswagen premium unit has reported record sales and profits and launched a big product offensive. Stadler, 48, joined Audi in 1990 with responsibility for controlling tasks in sales and marketing. In 1997, he became head of the board of management's office for VW Group, adding the additional role as head of group product planning in 2002. A year later he was appointed Audi's finance boss, a job he held until he succeeded Martin Winterkorn as CEO four years later.
Let's start with a look back. In 2005, we worked out how we see our course up to 2015. We have now made it more than halfway, and we can say that our Strategy 2015 has borne fruit. To this point, we have grown about 50 percent in volume and have significantly improved all operating figures related to our rate of return. On this basis, we are now honing the company. At the moment, we are making decisions on products that are designed to make us successful beyond 2015. Here it's important that we specify a framework of objectives for the time period. And that is Strategy 2020.
Over the next 15 years, we see growth of about 60 percent in overall passenger car demand. The premium market is even expected to grow at a proportionately higher rate. Encouraged by our successful course over the past few years, we want to sell more than 2 million cars a year by 2020.
Right. A straw fire only creates heat for a short time and afterward you freeze. That is not our philosophy. So the core of our approach is sustained, quality growth in the future too. We have already come a long way in recent years. Our profit margin never fell below 5.4 percent even during the financial crisis. Our employees know that this stability in the face of crises is a precondition for secure employment.
Profitability is an important argument in the global war for talent. And then we focus on our strengths in the cutting-edge fields, including lightweight construction, connectivity, the networking of the car with its environment, and the E-tron with its electric drive. We are also working on new sales formats.
Today our array of models is so wide that only a fraction of them can be displayed in large Audi terminals. Furthermore, they cannot build large showrooms in attractive inner city locations. We are developing new sales formats to be close to the customer with all our products, precisely when he has the time and desire for them. You will be surprised.
I don't like the term “cash cow.” Let's put it this way: We want to contribute to the success of the entire company.
The year still has a few months to go, and we always tend to be rather careful with our predictions. But we have set a clear corridor for our objectives. Of course, we will be happy if the numbers turn out to be a bit higher, as they were between January and June.
We are planning on a profit margin between 8 and 10 percent.
We will clear the bar of 1.2 million sales cleanly, perhaps with some air in between. But let's look beyond 2011. With the new generation of the A6 and the Audi Q3, which reaches dealers this autumn, we are creating the conditions for a successful 2012 when these models will be available over an entire12-month period for the first time.
To continue to grow. Ultimately we have 2 million in our sights and want to continually up the ante year after year.
As early as 2014 according to our estimates. But we have nothing against it happening earlier.
As far as we are concerned, this isn't a race for volume. It's possible that we could overtake one or the other of them
As I said, we have our own goals – and are looking at our brand's sustainable, quality growth.
You need a base of quality growth. Over the past 10 years, we have spread out our product portfolio significantly – with new models such as the A5 as a coupe, convertible and sportback, the A7, along with the Q3 and Q5. Lastly, our renewed products came along and are still coming: the A8 and now the A6. It worked: The Audi A8 is No. 1 in its segment in Western Europe. Over the next few years, we want to mainly grow from the B-segment upwards.
In the US market, in particular, it's true that we will grow disproportionately in the upper segments.
The A1 might be introduced to the U.S. market in its second generation. But this is a matter of where we plan to put our emphasis in the North American market. And one emphasis relates to the question of whether to establish our own production facility in North America.
It is totally clear that we need new production capacity in the U.S. The question only is when. We will only make a decision as part of the total package. In the process, we are also considering powertrains, since we're striving for a high degree of localization. We have a lot to discuss internally. One must not forget that we are indirectly charting a course for the entire Audi production network. And that's why we're taking the time that we need.
We will make the decision well before 2015.
We are doing extremely well and want to boost our sales by a percentage in the two-figure range this year, after breaking through the bar of 100,000 sales in 2010 for the first time.
Between 10 and 20 percent. Things are going the way we envisioned. Our dealers are even asking for more cars that we can deliver at the moment. No one would have anything against achieving our goal of 150,000 to 160,000 units earlier than 2015. But this is a marathon, not a sprint.
We are investing more than 900 million euros in Hungary to turn the facility into a complete auto factory. Starting in 2013, we will have a capacity of 125,000 cars in Györ. This is an important building block in our growth strategy.
You have to constantly be aware of the dynamics of the market. It took us 22 years to sell the first one million vehicles. We‘ll sell the second million in just three years, between 2011 and 2013. That's why we have to expand our current capacity of 300,000 units to about half a million units by 2020 the latest, even if our direct imports continue to grow significantly. For all of 2011, China will be our biggest market worldwide for the first time with a sales volume of about 300,000 units, putting it ahead of Germany. That's why we announced that we will produce the Q3 locally, in addition to the A4 L, the A6 L and the Audi Q5. The exact timing is not set.
Slowly, slowly. We are already building three models locally. A decision has been made on the fourth. The basic principle is that aluminum requires years of experience, and only the Neckarsulm facility has it. And besides, German engineering and production are important sales arguments for our flagship, especially.
We are very satisfied with the Q3 launch phase. Our people are on site and provide support. We have a capacity of 100,000 units there. I am looking forward to the market launch in October, after we noted such a good response at our driving presentations.
They are aware of it and our team is coming up with many good initiatives. We basically must succeed at an integral approach. The CO2 emissions of a vehicle alone are no longer sufficiently meaningfulE Just as it is no longer enough to develop an electric vehicle without answering the question: Where does the electric current come from? We also have to tell our customers what the CO2 balance sheet looks like in the manufacturing process. And that is why we are pursuing the goal of CO2-neutral production. We have had the building blocks at our disposal for quite a while. A cogeneration system is part of that, a combined heat supply with a nearby refinery, photovoltaic installations on our roofs and an almost closed water circuit in our entire factory. We consume only our drinking water. Everything else is recycled again and again. We are even considering mini-wind turbines on our plant roofs. Our e-gas project fits well with wind power: We can take the current that comes from wind power and store it in the form of hydrogen or synthetic methane gas.
On our own, we already produce a large portion of the energy that we consume. That's why we can mostly start here.
We currently have 62 engine variants emitting less than 140 grams of CO2 per kilometer and 19 models emitting even less than 120 grams of CO2. At the end of next year, we're already moving in the direction of 130 grams of CO2 per kilometer as a fleet average. An enormous achievement is behind this.
We just presented our Q5 hybrid, which can travel farther than any other hybrid purely under electric power. Then the A6 and the A8 arrive as hybrids. And don't forget the purely electric R8 E-tron, which follows in 2012 as a small production run.
We still see a few lucrative niches in the markets, which is why we continue to expand. The Audi model family could absolutely grow to 50 members one day.
This year we want to sell 120,000 units of the two-door model. Recall that the figure was just 80,000 units in our original planning. We will introduce the A1 in China at the end of 2011 or beginning of 2012. Then a four-door A1 will come at some point. So we have enough to do. The convertible is a topic for the second generation.
We are now launching the fleet trial in Munich. And we will make a decision on its suitability for regular production only after meaningful results are available to us. But I consider the A3 E-tron to be a beautiful, compact, environmentally friendly city car, which we are planning along with the next generation of the A3, which is due in 2012.
You have to be very careful there. The A5 Cabrio is already a large, stylish model. As a rule, convertibles are for driving with two people. I don't think the A7 really comes into play here.
We are giving a great deal of thought to this. But there still haven't been any decisions.
I have also read that a Q4 and a Q6 would be theoretically possible. But here we are moving too far into the realm of speculation.
I would rather not join in the speculation on that either.
Each brand has its own product responsibility and authority over development. At the same time, we turn to modular structures. There are precisely established responsibilities for this. The genetics of the respective brands remains unique and protected by this system of responsibilities.
The Aventador, the successor to Murcielago, will soon reach the market. Then, in a few years, the successor to the Gallardo is coming. Both are extreme sports cars and their markets fluctuate very sharply with the ups and downs of economic cycles. That's the reasons for the basic idea of a third model line, which can have a stabilizing effect on manufacturing utilization. But there hasn't been more on this than the Estoque concept car, which we have already exhibited.
As I said, the Aventador and Gallardo come first and then we‘ll take the third step.