Audi is sticking to its goal of selling 2 million vehicles a year by 2020, up from an expected 1.5 million this year. The automaker plans to invest 11 billion euros ($14.82 billion) between 2013 and 2015 in its bid to become the global No. 1 premium brand. CEO Rupert Stadler, 50, talked about Audi's plans with Automotive News Europe Editor Luca Ciferri at the brand's headquarters in Ingolstadt, Germany.
Q: What is Audi's biggest challenge?
A: To become the leader in the premium segment. What is most important is that we create the attitude inside and outside the company that enables us to make it.
How will you do this?
Spirit matters. You cannot win every match, but you must get up again, fight again and believe in your ultimate success. This gets into the mind-set of people; it sparks creativity and is a platform for innovation. It also empowers people when it comes to big investments, and we are investing heavily in the future.
How much are you investing?
Last year we announced about 11 billion euros [$14.82 billion] in investments between 2013 and 2015, mainly in new products and sustainable technologies.
Will Quattro become Audi group's fourth brand?
No. Quattro is our genetic code. It will not become a separate brand. The Quattro four-wheel-drive system is in 45 percent of the cars we sell worldwide. We have sold more than 5 million Audi models with Quattro four-wheel drive, more than any other premium carmaker in the world.
At the Frankfurt auto show in September, Audi's Quattro unit showed two concepts. Which of the two has the better chance to be produced?
The Sport Quattro concept has a great market potential. This concept describes in the best way the genetic code of Audi in terms of design, architecture, power, with its V-8 twin-turbo engine, and future technologies such as its plug-in hybrid powertrain. It is the essence of what Quattro stands for, and you will find many of its technologies in the upcoming Audi models. Nevertheless, we will never stop testing different areas with new product concepts such as the Nanuk. This is part of our way of doing business.
Is 2 million units still your target for 2020?
Yes. It really does not matter if it happens one year sooner or later. You have to give your team the right direction and roadmap. We did it eight years ago with the 1.5 million target, which we wanted to achieve by 2015 and will happen this year. When we first went for the 2020 target we did not know how exactly the 2 million units would happen, but step by step we determined how to achieve it.
How are preparations coming at your new plant in San Jose Chiapa, Mexico?
Three years before our factory opens we are already teaching and training people. Mexicans are presently in Ingolstadt and Neckarsulm. Meanwhile, we are also sending managers to Mexico. In addition, we are training Mexicans at Volkswagen's training center in the country then bringing them to Germany. This is how we ensure the Audi quality.
The Q line of SUVs is planned to grow to 30 percent of your global sales by 2020, from 25 percent last year. Why?
There is a lot of potential there, not only in Europe but also in China and the U.S. The smaller Qs give you volume growth, the bigger Qs give you image, prestige, revenues and margins. The same works for the A line, from the A1 up to the A8. Do not forget that entry models bring in many customers who are new to the brand. They also help to keep the brand young. For example, 75 percent of all A1s sold are conquest sales. We have similar expectations for a Q model below the Q3, which is due to arrive in a couple of years.
How will Audi address increasingly stringent emission standards worldwide?
After testing many different solutions and getting extensive customer feedback, we decided that the plug-in hybrid is the best technology for the initial and midterm phases. In addition, let's not forget the cars that run on compressed natural gas. With the A3 G-tron we have our first model that burns CNG, and more will follow. I'm convinced that Phase 2 of the electrifying of individual mobility only becomes a reality when there is a big step forward for the battery range.
Why does Audi believe so strongly in plug-ins?
As the consumer is looking for range and wants to have the certainty of being able to stay mobile at any time, the plug-in hybrid is the best solution. We are also able to integrate this technology in all our existing and future plants. We can produce plug-ins on the existing lines. This distinguishes us from one of our competitors whose production is concentrated in just one place. Our A3 E-tron will cost about 37,000 euros (about $50,000). It's a plug-in hybrid with a range of 50 km (31 miles) in electric mode and a total range of 940 km (584 miles), which I think is the right answer to today's customer perceptions. Moreover, it is agile and dynamic.
How must the battery improve to move into Phase 2?
A pure battery car should have a range of at least 299 km (186 miles), not only in warm countries but also during winter in Europe. We have experienced this during fleet tests with our A1 E-tron, an EV with a range extender that provides you a range of less than 186 miles. When you tell the customer, 'I can offer you 349 to 399 km(217 to 248 miles),' then people start to think about it.
Our A3 E-tron with its plug-in hybrid system provides you with a lot more range with no restrictions not even in the luggage compartment. I am convinced that in five to six years, smaller and less expensive batteries can deliver ranges of more than 186 miles. At that point, pure EVs could become really interesting. Audi is well prepared. Also, being part of the VW Group is a big advantage in terms of shared technology and economies of scale.
Tesla can already offer that range, but its cars are very expensive. Is that a disadvantage?
We are going in different ways on battery technology. Tesla is using consumer cells; we are using automotive cells because we think this is better for lifetime quality.
What is Audi targeting for North America?
This year we will deliver more than 150,000 cars in the U.S., and then the 200,000 target gets closer. After years of hard work, the brand is now in a perfect situation. We are No. 2 on the shopping list, compared with No. 7 five years ago, when very few people really knew Audi.
We have begun adding our sporty and high-performance ranges, the S and RS models. We are investing to make Mexico the global production hub for the next-generation Q5, a vehicle that has a big potential in the U.S.
Does being just the No. 3 German premium automaker in the United States hurt?
Not at all. It is an opportunity. We are taking the necessary time to grow organically. Maybe with a little higher lease penetration we quickly could sell much more, but then our profitability would probably suffer. In addition, the dealer has to earn money and get customer feedback that he has a powerful brand in his hands. We have the lowest discounts in the segment.
If you do the right things, the growth in the U.S. will come because Audi is perceived as a real premium brand, as a very sophisticated techie brand.