Audi ranks as Europe’s sixth-largest brand, outselling volume automakers such as Citroen and Fiat. With the forthcoming addition of the Q1 compact crossover, Audi will put even more pressure on mass-market brands. Sales boss Luca De Meo explained how Audi is maintaining its premium-ness despite its rising volume in an interview with Automotive News Europe Editor Luca Ciferri.
Does a premium car need to be big?
Not necessarily, but it helps. There are, however, examples from Audi and other brands that have successfully established premium offerings in the compact and subcompact categories, mainly for Europe. We will soon add the Q1, taking the virtues of our successful Q range into the compact segment. At the same time, as a premium brand you always have to maintain the right balance across all segments. In general, I think most premium brands in Europe are trying to increase the center of gravity of their range. At Audi, our center of gravity traditionally has been the midsize segment. We reinforced that positioning with the Q5, which we basically sell at the same transaction price as the A6.
How is Audi going to adjust its center of gravity?
The A6 is an extremely successful car and with the next generation we will make another strong statement. We have already announced a second full-size SUV, the Q8. With the new generation of the MLB architecture, we have many opportunities to not only downsize, but also to move up in size, which is something required by markets such as the U.S., China, Russia and the Gulf countries because in these markets premium is also a matter of size.
Why do premium automakers outsell many volume brands in Europe?
There are some countries such as Germany and Switzerland where premium automakers traditionally sell more than some volume players. Switzerland is a small but wealthy market and Germany is the domestic market for Audi, BMW, Mercedes and Porsche, which all sell a significant number of cars to their employees – Audi alone has about 60,000 employees in Germany – as well as to companies. Then there are countries like the UK, where high premium-car sales are partly due to strong demand from fleets.
How do you define premium?
Using numbers, one golden rule is when your net pricing is more than 10 percent higher. This is also the profitability gap between some volume and premium manufacturers. Audi’s pricing is about 10 percent higher than in the volume sector, but things vary from market to market. And the reality is obviously how much money people are ready to pay in the showroom.