Will Audi HAVE TO CHEAPEN Its Product To Compete With BMW, Lexus And Mercedes-Benz?

Continue to drive a brand perception that Audi is more youthful and sporty then Merc and Lexus. It will drive a steady shift over time. Drive the idea that you do not want to drive grandpa's or dad's Lexus. Get them young and keep the brand loyalty for the long term. Even Lexus know this. Hense the sad attempt with the Predator grill.

- First and foremost, I believe Audi needs to build emotional cars. They're handsome, yes. They have nice interiors, yes. But, like modern furniture, they're lacking warmth and emotion. The only car in its lineup that seems to offer the right ingredients is the A5/S5. The A7 offers a nice exterior, but the interior is the same as the A6. I had an A6 for a day and, while I loved the engine, I just didn't feel like I was in a special car. As soon as I hopped back into my own car, that feeling changed. The interiors of the 5 and E make you feel something about the car and the experience. I was riding in my friend's first generation CLS and the minute you sit down you know you're in a special car. The new C also just raises the bar in its segment. The 3/4 Series, see below..
- While the 3/4 Series have nice, handsome, expressive exteriors, their interiors leave much to be desired. However, BMW's Ultimate Service plan makes it almost a no-brainer, no-risk decision. With Audi's still-questionable reliability, maybe this is something to consider.
- Audi needs to invest money in its dealerships. The Audi dealership here (in one of the most critical luxury-buyer areas in the state), is outright dwarfed by the Mercedes, BMW, and Lexus dealerships. And that's not an exaggeration. The Big Three's buildings, lots, location, and signage are all conducive to drawing attention. The Audi dealership is lost in the middle of them all. Not to mention the interiors of the buildings, which, if I didn't know better, could easily be a VW dealership. You walk into the Benz, BMW or Lexus dealerships, and you feel like you just walked into somewhere special. Walking into the Audi dealership is like lodging at a good hotel vs. the other threes' Ritz experiences. That feeling extends to the service area where the other three literally coddle and pamper you while Audi offers free coffee and a TV, with minimal seating. The dealership further south has the same challenges and it, too, is in a fairly busy luxury-buyer area.
- Haven't seen Audi's advertisements lately, but previous ads have been attempts to "insult" their competition. This type of negative advertising, specifically for premium/prestigious brands, just isn't effective. Lexus' recent ads with the GS took a somewhat similar approach, with little impact on GS sales numbers. Look at advertisements in high-rent magazines. They focus strictly on their product and why their product(s) is/are superior and don't mention the competition. They don't mention the competition because they feel their product(s) is/are so superior that there is no competition. That's the feeling that Audi needs to instill in their prospective customers.

The 5 series interior makes you feel special? I just test drove a 5 and A6. The A6 is miles ahead in terms of quality and design. Better plastics, real leather, finer looking wood and metals, switches feel more substantial.... I could go on and on.. The 5's interior screams cheap and made me feel like I was getting ripped off for the money. The A6 was an easy choice to put in my garage.

Plus the BMW dealership (Roxbury, NJ) was really dark inside and out. Inside, the lights were really dim. Outside, they had no lights on the lot. I guess that is how you hide the low quality. BMW really needs to pick up their game or they will lose market share over time.

I have to disagree with you about BMW vs Audi interiors (I currently have a BMW) -- the Audi interiors are way ahead in terms of quality and appearance, BMW interiors are very stark and dull in comparison.

Audi Central here in Houston just built a huge (5 story) showroom, service, and storage facility, it is an amazing space...it blows away the local BMW/Lexus/Mercedes showrooms.

the prices i think are already in the same category for each segment they compete in. where audi sucks bad are their lease deals.
you can get an m3 for 900 a month while an rs5 goes for 1100-1300 with the same amount out of pocket.
an a7 leases for 900 at like a 65k msrp. you can get an 80k 550xi for the same 900. thats where they need to be more competitive.

true but they don't need to spend that kind of money for their 4th largest market like BMW needs to for their top market. BMW and MB knows like you just proved it's all about the MSRP not the quality. (not that any of the cars you mentioned are bad)

Audi is already the cheapest German "premium" crap storm.

the lowest MSRP is not the cheapest

If i charge you $60,000 for a dimond ring that is worth $50,000 is it realy a $60,000 dimond?

Audi is NOT quality.

way to add to add to the conversation

Mattie do you even own an Audi, BMW or MB?? Why is it seems like you're always putting your foot in your mouth about something. I've owned ALL three auto brands: MB (2), BMW (4) and Audi (4). I've NEVER had an issue with MB that I've owned or any of my Audi's. Their quality and craftsmanship has been spot on in ALL my Audi's and MB. My BMWs I've run into some issues but nothing too major.

Half the crap you say is just that "crap". I think you work for a defunct AMC dealership and think you know something about cars. At any given time, with any brand, any model, a person can have the misfortune of drawing the unlucky card getting a dud mobile. My Audi's have been wonderful craftsmanship inside and out. I moved from a BMW because that bloated 5 series kept packing on the pounds; hated the run flat tires (they still use those, plus they get less mileage, run harder on surfaces). When you buy German products you aren't buying them to be a reliable Lexus. So until you own a few of these German brands, you should keep your "AMC PACER" ownership experiences" to yourself.

@gkerns56 Unfortunately I used to own a big interest in an Audi dealer and they are reliability/durability nighmares. I dumped the chunk on a "true believer" newbie

when and where did you own this dealership? this should be fun

Agent00R. Go take a Audi101 class in Ontario, CA. Audi's goal to sell more units is by doing it their way. Not with CASH on the hood, Not with cheaper products. Audi is the most profitable brand under the VW Auto Group. If the customer can't afford an Audi, then that's not an Audi customer. They believe the customer needs to step up. They have a motto in the class. They don't want to be in every driveway, just the right one's. BMW's lease portfolio took almost a billion dollar hit last year with write offs on lease returns. Gee, wouldn't some of that money be better spent in R/D ? Most customers trying to get out of MB or BMW lease early are all buried, not an Audi. Go to an Audi dealership, they don't over produce their cars. Try and find a Q3, low on Q7's, Q5's, RS models, very low production numbers, unlike AMG/M-Series, and thats why Audi's hold value.

i want to sell to every customer. Come my way. But with Audi it's more of a sell and emotion. Anyone can sell a 5 series or an E class for $300 a month. where is the emotion there?

Your comment makes me laugh.

You'll be eating crow in five years.

And I am pretty confident Porsche is the most profitable company under the VAG umbrella.

Audi definitely does not have to lower its materials costs, share more parts with other VWAG brands or become more aggressive on its leases or offer larger discounts like BMW to be competitive.

Audi has crafted a careful brand image of youthfulness, design, luxury, and innovation. Audi has the lowest average age of the big 3 German brands, has received numerous design awards, is widely regarded as having the best interiors in class and has gained wide praise for its use of innovative technologies like LED headlights, Quattro AWD, Google Maps-based navigation etc.

Most importantly, Audi is seeking to achieve steady and profitable growth. Audi already reduces its costs by sharing across the VWAG portfolio of brands and it does not want to raise its sales volume at the expense of profitability.

Audi is already the world's second largest premium brand and is right on BMW's heels for the top spot. Last year Audi's U.S. sales rose 15% so it is doing things correctly. Clearly Audi's strategy is working and most importantly its strategy is effective on a global scale.

With Audi spending $29 billion through 2018 in its quest to claim the top sales spot from BMW, perhaps the more appropriate question should be, is BMW doing enough to stay ahead?

1.The question should be in the USA? Audi passed MB as the #2 manufacture in the world of luxury cars. Not including lambo and not because they offer cars like the A3 (the A6 is the #1 selling lux car in the world)
2. Audi Ag is the most profitable car company in the world.
3. Audi of America is the 4th largest market for Audi where ever other IHG brand has the US as their largest brand
4. Audi has one of the oldest product lines but in 18 months they will have the youngest. This is why people look at design and say nothing new. Hell the Q7 came out in 2007 as an “08 model and still sells out.
5. Audi sales are years ahead of projections. In the US a dealer selling 100 cars would be the top dealership in the country. Last month the top dealers sold over 300. In fact the dealership I worked at had the best month on record with 119 and we were toward the bottom of the pile.
All this being said nature says products will have to cut cost to keep up with the volume in the US with brands like BMW or MB. No one can tell me a C class, E class, 5 series, 3 series have the same quality build as they did 5 years ago. The technology is nicer but the chrome is being replaced with chrome colored plastic.
The real question is will Audi need to increase incentives to keep up the momentum or can they ride this craziness out? Audi rocked in 2008 as most brands fell because of new product. Audi should be flat this year as models go offline and are replaced.
Of course I would love the help from Audi to be more but I don’t want to see the quality go down to much just to increase volume.
Thanks,

EvilHomer

Here are some fun facts
BMW 528I X alg (real residual) 36 months 15k miles 46% BMW F 58% 12% or around $6500-$7500 per car
MB e350 sport 4matic 42% MBF 62% $11,500 to 13,000 a car.
Audi A6 turbo quattro premium ALG 51% AFS 54%
I just picked these cars because I though the A6 would be one of the lowest because the refresh is out in a month.
These incentives do not include the pull ahead or other incentives used

one last thing people keep referring to Audi sharing tech with VW, that isn't a bad thing. also they ignore Audi sharing with Porsche, Bentley or Bugatti
MB and BMW are always looking to share with brands like Toyota and Nissan to keep up with Audi

More or less Audi, BMW and Mercedes compete equally in almost all segments. Mercedes, and to a lesser degree BMW have a bit more edge in the higher segments but Audi should not all "drop down' for volume. A steady progress will put them as equals in the US in the near future. Worldwide they are equals more or less, if anything Audi has trailed some segments but has been ahead occasionally in a few others such as the R8. Audi is strong enough overall worldwide to not have to go cheap or desperate in the US. Are they behind in America? Yes, but should they go desperate in search of volume, no way!

Duh, that's what the Volkswagen brand is for. MB and BMW do not have a mainstream brand. Lexus has Toyota, Audi has VW. MB and BMW have to dilute their cache by selling "cheaper" products in volume. Audi can maintain its dignity and quality components by pushing the volume onto VW.

Luxury is NOT supposed to be sold in volume. That's the conundrum that MB/BMW face.

You seem to not understand "volume" sales. "Volumes" sales is the 2million+ or the almost 1.4million cars that Toyota and Honda sold, respectively. Comparatively speaking, the ~340k units sold by both Benz and BMW and the 310k units by Lexus are modest, relatively speaking. And Audi isn't even close to that. You can try to justify all you want that Audi is "maintaining its dignity" all you want, but the reality is that it can't compete in the same arena at this point in time. And Benz and BMW "diluting their cache by selling cheaper products"? Really? So, why did the S-Class and GL each almost outsell the CLA? Why did the ML almost sell twice as many units as the CLA and outsold the GLK? Why did the X5 double the sales of the X1? Why is the 1/2 Series basically an afterthought in the volume sales of BMW? You can't say the same for Audi's sales trends. The lower-priced vehicles easily outpaced the higher-priced vehicles which, for all intents and purposes, SHOULD be the logical trend. However, both BMW and Mercedes appear to prove that people are willing to pay for their mid-to-upper priced products just as much as their lower-priced products.

BINGO!

cant stand the " audi is not for everyone " arguement .. what the hell does that mean ??? and how long will they use that slogan ?? arent they trying to outsell bmw and mercedes ??
the rs5 is rare and awesome, i want one, i really do. but because its lease deal is crap thats why its rare !!!
just wonder what tune audi sings once they are selling more than bmw and benz,, wheres the exclusivity factor then....

Audi and Volkswagen need to pay more attention to reliability - where they have problems. A relative had an a4 that spent more time in the shop than on the road. People who have bad experiences tell far more people about them than people who are happy with their cars.

However - Audi has taken the ALL have ONE look too far. All their cars look alike - from afar it is hard to tell one from the other. That may be good at the low end - but people do not want to spend big money on a car that looks like the smaller and cheaper ones. They are finally getting rid of the cow-catcher grill - a design I never liked.

1. Audi is already more profitable than both BMW and Mercedes-Benz due to its economies of scale achieved through parts and platform sharing across VWAG. This extra profit is being invested to help growth the brand further.

2. Audi has achieved 48 consecutive months of record sales growth in the U.S., the longest active streak in the premium market.

3. Audi's sales in the U.S. were up 15% in 2014.

4. Audi is the world's #2 best-selling premium brand just behind BMW.

5. Audi is spending $29 BILLION through 2018 on new models, research and development and improvements in its manufacturing facilities

6. In China, already the world's largest auto market overall by total sales with projections for it to become the world's largest auto market for premium automobiles as early as 2016, Audi outsells BMW and Mercedes-Benz by almost a 2 to 1 margin and Audi sold almost 579,000 new vehicles in China in 2014, an increase of 17.7%.

7. Audi has fewer models than BMW and Mercedes-Benz and its core models the A4, A5, A6 and Q5 are much older than BMW's 3-series, Mercedes-Benz's C-class and Mercedes-Benz GLK.

Union labor makes their cost higher....

Audi is doing just fine and the right way. They're building the brand with really good product in all segments. The only thing they need to do is probably get a few more dealerships in certain areas. Wherever there is a BMW or MB store, there needs to be an Audi store. Then they need to maybe make their designs a little more emotional, they're good looking cars, but dull at the same time. If that makes sense. Lastly, quit being so slow with product updates. MB and BMW are much faster getting new cars to market and updating the ones they already have on the market. The Q7, A5 and now A4 are just old and their replacements are still a year or more away. Why show the new Q7 at Detroit in 2015 and it won't go on sale here until Jan of 2016? MB and BMW show a car at any auto show in the world and in 6 months or less it is in the U.S. showrooms. Audi just needs a few tweaks and they might catch BMW and MB in the U.S in the next 5 years.

Mercedes though is going expand at the top end like gangbusters. S Cabrio and Maybach, cars for which Audi will have no answer too. The A8 gets killed at the top end by the S, hell they all do. That is a problem. Mercedes opens up more wallets at the high end than BMW or Audi. Then the C Coupe and Cabrio are coming. Next E sedan, coupe, cabrio and wagon, all TRUE E models this time, unlike the current E Coupe/Cabrio.

BMW is going shove a 1-Series sedan on the market in the next few years, not sure how that will play out.

Audi can do it, but they have to stay on course. I think they will pass BMW worldwide in 2015. They're main problem is slow updates and market introductions.

I enjoy my current Audi; it's been bullet proof (so far). Since I spend much time driving, I love the quality interiors and use of higher grade material from Audi are wonderful.

I own a BMW e46 thats a 3series, its from july 2004 great exterior and interior, and I must say the plastic used in this model is of very High quality mine look like its a new car. Only "problem" I had with it, I once had a dead battery, thats it not bad for an 10 year old car.