Audi Greets New Year With Both Barrels

Americans may consider the traditional sedan market as attractive as the bogeyman, but the rapid shift in consumer sentiment will not have Audi running scared in 2019.

“We plan to focus (increasingly) on the (CUV) segment to get a greater level of coverage, which is keeping with market trends,” says Cian O’Brien, vice president and chief operating officer-Audi of America. “But we are still seeing a very healthy appetite across the U.S. for sedans.

“For us, it’s just about adjusting the mix to the appropriate levels, which is part and parcel to our plan for 2019,” he tells Wards in a conference call to discuss the outlook for Volkswagen’s volume luxury brand.

So as Audi looks forward to a full sales year for its all-new Q8 large CUV, as well as a new Q3 small CUV and its first-ever e-tron battery-electric crossover, the sports-sedan pioneer also will enjoy fresh momentum from newly updated midsize and large sedans including the A6, A7 and A8. The brand’s A4 compact sports sedan receives a facelift, while updates also were made to the TT RS coupe and R8 coupe and Spyder.

German luxury automakers brought the sports sedan to the U.S. in the 1980s and watched it fatten their wallets over some 25 years. America’s rush to crossovers has led to speculation of death to the fun-to-drive 4-door, but for the luxury segment such a pronouncement may be premature.

While the truck segment including CUVs commanded 72.4% of total industry sales last year, the luxury segment witnessed a greater parity with a mix of 46% cars and 54% trucks.

That leaves Audi greeting its 50th year in the U.S. with both barrels loaded, if it has corrected inventory issues that dogged its 304 U.S. dealers last year. Several of the company’s best-selling models, including the A3, A4 and A5 Sportback were held up by Europe’s new Worldwide Harmonized Light Vehicle Test procedure.

WLTP certification led to a delay in submitting the cars to U.S. regulators and those models saw deep December declines, which contributed to a 16% sales swoon for the brand to 22,765 units in December and a 1.4% retreat on the year to 223,323. Audi generally likes a 66 days’ supply for those models, but A3 stocks dipped to 22 days’, while inventories of A4 fell to 14 days’ and the A5 Sportback to 22 days’.

“We’re really undersupplied on the sedan side,” says Audi of America President Mark Del Rosso. “We’ve missed a lot of opportunities to fill consumer demand. The good news is the consumer demand is absolutely robust. Customers love Audi, they love the technology, they love the product, they want to buy our cars, (but) our problem is we just can’t supply them.

“However,” he adds, “there is a bit of a light going into this: For the first quarter of this year we start off with very good inventory, and we’re pleased to report that we hopefully can take care of our customers and our dealers with that increased inventory.”

Looking ahead, Audi brings its first BEV to market with e-tron, also a crossover, in the second quarter. Together with the e-tron GT concept, a coupe-like sedan shown at the Los Angeles auto show in November, Audi demonstrates in 2019 a full commitment to electrification despite the cars accounting for a fraction of industry sales, Del Rosso says.

“Ultimately, consumers will vote with their hard-earned money and, clearly, they are signaling they want vehicles that are electrified,” he says, pointing to the success of Tesla and other new EV entries, such as the Jaguar I-Pace.

“By 2025, 30% of our volume will be electric,” he adds. “We are fully committed to electrification. The compelling offer we can make to the consumer is, first and foremost, it is an Audi. Judging by the response we have had to the e-Tron, we are highly bullish on electric.”

Audi joins its parent brand Volkswagen and luxury stablemate Porsche in going electric after the Dieselgate scandal, which led to the recall of millions of vehicles, the arrests of top VW executives and a $14.7 billion civil settlement with the U.S. EPA.

Audi’s electrification strategy will get major play during the National Football League’s Super Bowl on Feb. 3 with a 60-second commercial in the second quarter of the game. The spot’s electrified theme will include the e-tron, e-tron GT and e-tron Sportback.

Audi e-tron GT to follow e-tron Sportback due in 2020.