U.S. Audi Chief Counting on Diesel Demand to Boost Brand’s Standing

TRAVERSE CITY, MI – Audi of America is counting on the widespread adoption of diesel to boost it to luxury leadership in the U.S.

“We are waiting for far more universal adoption” of diesel in the United States for its fuel efficiency,” Scott Keogh, president and CEO of Audi of America says at the Management Briefing Seminars.

“What you are asking the consumer to do is move his hands from here to here,” he says, mimicking the distance of two fuel hoses at a filling station. “That is why we feel that diesel is absolutely getting ready for the marketplace.”

Audi began selling diesels in America with the Q7 cross/utility vehicle and A3 Sportback. Keogh says 30% of Q7s and 60% of Sportbacks are purchased with diesel engines, and this year the A6, A7, A8 and Q5 are entering the market with Audi’s 3.0L diesel mill.

Diesels offer 20% to 30% better fuel economy, he says, noting the Audi A6 gets 36 mpg (6.5 L/100 km) on the highway.

Audi’s parent Volkswagen has been selling diesels for years in the U.S. to a small but determined customer niche. In Europe, diesels dominate the luxury segment, both for their torque and for their fuel economy.

Keogh ties Audi’s diesel interest to the brand’s success at the 24 Hours of Le Mans race in France. He attended the race in 2006 shortly after joining Audi from Mercedes-Benz, where he worked in communications.

Audi won with its diesel racecars, which required fewer pit stops than the gasoline competitors – also true of Audis on European roads, he says. Keogh returned to the U.S. persuaded Audi would be a top-tier luxury brand here.

The Audi chief has little to contribute to his panel’s discussion on sustainability, but plenty about racing’s influence on Audi’s spirit, and plenty about the brand’s rise in the luxury constellation since he joined the auto maker.

“We are a mad, paranoid, crazy company,” Keogh says with gusto. “Our intent is to sell 200,000 units and be the definitive luxury brand in America.”

Top executives have given Keogh a goal of 200,000 sales by 2020, “and we will get there well before that.” He anticipates reaching 150,000 units this year, after 139,310 in 2012, noting deliveries were up 13.6% in the year’s first half.

Globally, Audi provides 46% of the Volkswagen Group’s profitability, and Keogh’s record over the past six years certainly has contributed. Not only is volume up in America, but the average selling price has increased by $9,300 since 2006, to about $54,000, thanks to a better mix and richer content.

Audi has moved from the No.7 luxury brand in 2006 to No.2 in 2012, behind only BMW, he says.

Keogh shares competitive data showing that in 2006 Audi was losing sales in the U.S. to all competitors except Volkswagen. In 2012, however, the brand won more customers from other brands than it lost, for example netting 537 units from Mercedes-Benz, 952 from Infiniti and 1,828 from Acura.

Customer awareness of the Audi brand has closed the gap with BMW, Mercedes and Lexus, he says, and in purchase intention it is edging out the others.