Audi’s Keogh Has No Desire to Mess With Success

AVON, CO – Stay the course.

That’s the message Audi sent last week when it named Scott Keogh its new top executive in the U.S., and Keogh says he has no intention of doing anything but.

“A ton of things have gone well (for the German luxury brand in the U.S.),” he tells WardsAuto in an interview here at a media backgrounder for the ’13 A4/A5 model line. “And that’s what we want to keep emphasizing.

“We’re not changing course. We’re not tweaking strategies. We’re not reinventing anything.”

Keogh, who has headed marketing in the U.S. for the past six years, was named president of Audi of America last week, filling the slot vacated by Johan de Nysschen, who resigned unexpectedly earlier this month to take a job overseeing Nissan’s Infiniti luxury brand worldwide.

“I was (shocked),” Keogh says of learning of de Nysschen’s decision to leave, which he announced in a conference call to key staffers. “I think the entire industry was. He kept it close to the vest and under his hat.

“(De Nysschen) was 19 years as an Audi executive, (and) very respected. So it was an emotional time for all of us.”

The auto maker’s board in Germany moved swiftly to plug the gap, a sign that, despite some recent upheavals in the executive ranks at the parent company, it is pleased with the pace of progress in the U.S.

“I went to Germany and met with some of the executives I know and have had a working relationship with, and they made the decision two weeks later,” Koegh says.

Although the Audi insider wasn’t the only candidate considered for the job, the success of the up-and-coming luxury brand and pressure from dealers to keep the boat from rocking appeared to give Keogh a leg up in the selection process.

“I think what the dealers always want, since they’re businessmen and invest a lot of capital over the long term, (is) consistency and stability,” he says. “You’ve seen the metrics we have right now. We have record sales, record market share, record pricing and the dealers are at record profitability levels.

“The dealers very much wanted a continuation. They definitely wanted an American executive who understands the brand, understands where it was, rightly or wrongly, and certainly where the brand is heading.”

Where Audi is heading is upmarket, Keogh notes, thanks to strong sales of its top-end C/D-segment cars, the A6, A7 and A8.

“If you look back in the day, about 11%-12% of (Audi’s) total volume would come from the C/D segments,” he says. “We have a stated target of being closer to the 30% zone. Year-to-date, we’re at 31%.

“We want to continue that, because we think it’s important for the center of gravity of a luxury brand to be much higher. The sign of a weaker luxury brand is (having) low pricing and low volumes. And that’s a sure sign you don’t have brand power.”

Audi transaction prices in the U.S. have risen some $6,000 per unit in the past two years, topping $50,000, the executive says.

The A7 mix is running 65% in favor of its highest-priced model, stickered in the mid-$70,000 range. Keogh expects a similar trend for the A6 line, when it introduces a quattro all-wheel-drive model this fall.

Building volume is the other big business objective, and Keogh says that will continue this year, as the brand “aggressively” shoots to break 2011’s record mark of 117,561-unit sales.

“The strategic target for us is 200,000. And we want to do it (while) holding pricing, holding residual values and delivering a healthy business case.”

Product availability remains tight and is likely to stay that way until Audi adds new capacity in Mexico for 2016.

The pipeline for Q5 and Q7 cross/utility vehicles is expected to loosen up later in the year, Keogh says, but customers are getting accustomed to waiting a bit for built-to-order cars. About 32% of Audi customers do not buy their vehicles off the lot.

“We are seeing a lot of people order cars,” he says. “We can build to thousands of configurations, and it’s more about when can I get my car, as opposed to how cheap can I get the dozen of cars that are sitting on the lot.

“This is healthy, healthy stuff. If we can keep that going, that’s the holy grail scenario.”

Keogh’s immediate task will be to find a replacement for his now-vacant marketing slot.

“I’m working on it,” he says. “This is only day three for me.”

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