Audi sales chief outlines how digitalization is changing the rules of the game

Audi has fallen back into third place in global premium car sales behind Mercedes-Benz and BMW, in part due to the automaker's model cycles. With key arrivals such as the new A4 now available, Audi expects a boost. Audi sales boss Dietmar Voggenreiter said, however, that today's success in the automotive industry is measured by a lot more than volume. He explained why in an interview with Automotive News Europe Correspondent Christiaan Hetzner.

You were in charge of strategy at Audi when it set its target to sell 1.5 million cars by 2015. After selling 1.8 million vehicles last year what is the next goal on the way to 2 million in 2020?

The industry's business model hadn't changed at that time, so the most common goal was to drive volume by expanding into new markets and segments. Of course, increasing global sales remains an important parameter for success and we are heading toward 2 million units by 2020, but we need additional KPIs [key performance indicators] to showcase our broader mobility approach. Pure volume figures don't convey the growth of on-demand mobility services or possible revenue from the sale of anonymized data generated using the swarm intelligence from our cars. These developments are highly complex, so it's currently difficult to quantify them financially.

How is this changing marketing?

Roughly two-thirds of our advertising for the Q2 crossover is digital rather than classic channels such as print and TV. The advantage of social media is that it provides immediate feedback. We can see through the number of views and likes how consumers are reacting to our spots. Right now we have two in the top 10 charts for most shared ads including our T-Rex ad for piloted driving. The challenge is to offer creative and captivating stories. You can't reach people with traditional sales-driven ads through digital distribution channels. They get bored quickly and click away.

And how is it changing auto retail?

We are already the leader in digital showroom concepts and we intend to expand that. Take for example the rollout of nearly 200 Customer Private Lounges worldwide by the end of this year. Here buyers can configure their cars entirely to their tastes. They can compare various interiors or inspect their rims up close -- all in high definition on a large screen or, soon, with virtual reality headsets. This leads to a measurable increase in revenue per car sold at our participating dealers. Customers order more options or assistance systems when they can experience them virtually as opposed to simply reading about them somewhere in a brochure at home. Audi dealerships that have already been equipped with digital modules have seen spending for optional extras increase by 15 percent on average.

How did your nine years running Audi's business in China help you?

All three global megatrends that are changing the way we advertise, market and sell cars - whether its sustainability, urbanization or digitalization - are found at their most extreme in China. The largest market for electric cars will be China. The average Chinese consumer spends almost 4 hours on his smartphone every day, for example, and mobile payments are second nature to them, so China was a super school for me.

Premium brands such as Mercedes-Benz and BMW have started car-sharing schemes, what about Audi?

We have always said that we are not going into public car-sharing. Walking 500 meters to a car you booked only to find the previous occupant left it a mess is just not a premium experience. Our answer is selected stationary formats we are gradually rolling out worldwide. Just recently we started "Audi at home" in Hong Kong. We teamed up with a real estate developer to offer cars on demand at his building complex because he has twice as many luxury apartments as parking places. Our well-established dealer network with 3,000 sales points worldwide is very important when it comes to scaling and enlarging our mobility services. I am convinced that this is a huge advantage over Google or Uber.

What about electric cars, does Tesla have too great a lead already?

We've had long discussions within Audi about when might be the best time to move into electromobility. In the past, we felt the market conditions were not supportive enough yet. That will change both in terms of electric range and charging infrastructure in the coming years. We are convinced that we got the timing exactly right as we will enter the market with our first full-electric vehicle, the Audi e-tron, in 2018.

What is the future for the diesel?

We are constantly looking at diesel penetration rates in our orders. They are stable. Some fluctuations are related to the product cycles of important models, some a result of lower oil prices, but overall the change is minimal. We're talking a tenth of a percentage point worldwide. Customers continue to love the torque and the fuel economy of a diesel. We don't see any measurable effect from the diesel issue on customer demand for that technology.