11 January 2010

Volkswagen Will Decide on Building Audi Cars at New U.S. Factory This Year

Bloomberg


Volkswagen AG, Europe’s largest carmaker, plans to decide whether to build Audi luxury cars at a new U.S. factory before the year is out, according to Peter Schwarzenbauer, the unit’s sales chief.

VW will gauge the recovery in the U.S. market before ruling on Audi’s production at the plant in Chattanooga, Tennessee, Schwarzenbauer said in an interview. VW now projects U.S. auto- market sales of as many as 11.5 million vehicles this year, “slightly more optimistic” than a few months ago, VW North American unit’s chief Stefan Jacoby told reporters yesterday.

While Audi is outperforming BMW and Daimler AG’s Mercedes- Benz unit in China and Europe, it’s lagging behind in the U.S., the No. 1 market for luxury vehicles, where some drivers still associate the brand with accidents in the 1980s and 1990s. Even as the gap narrowed in 2009, when U.S. sales held up better than at rivals, the total of 82,716 Audis registered was dwarfed by BMW’s 241,727 vehicles and Mercedes’s 190,604 cars.

“The U.S. hasn’t been a cushy turf” for Audi, Schwarzenbauer said in a telephone interview before the Detroit motor show, which begins today. The Ingolstadt, Germany-based unit needs “long-term growth” in the market, he said.

Targeting BMW


VW, which wants to dethrone Bayerische Motoren Werke AG as the world’s largest luxury automaker, has a target of selling 200,000 Audis in the U.S. by 2018, accounting for 20 percent of the 1 million cars VW aims to sell in that market by that year.

Volkswagen’s preferred shares rose as much as 1.33 euros, or 2 percent, to 67.79 euros and were up 1.5 percent as of 11:24 a.m. in Frankfurt trading. The stock has risen 73 percent in the past 12 months, valuing the Wolfsburg, Germany-based carmaker at 29.7 billion euros ($43 billion).

Volkswagen sold about 214,000 cars in the U.S. last year, excluding the Audi brand. VW aims to more than double the figure to 450,000 cars by 2012 to 2013, Jacoby said at VW’s U.S. headquarters in Herndon, Virginia.

Audi will unveil an electric concept car in Detroit. The vehicle won’t be on the market until 2012. Audi’s presentation will include a repeat rollout of the flagship A8 sedan, which made its world debut two months ago. The unit will hold back on presenting its new A1 compact until the Geneva show in March.

Audi’s Plants

The division has no factories in the U.S. and assembles cars at two German plants in Ingolstadt and Neckarsulm as well as in Gyoer, Hungary, and Brussels. Audi said Dec. 28 that it will spend 7.3 billion euros on new models and plant upgrades through 2012, with 3.8 billion euros going to the German plants. It didn’t give details on U.S. spending.

“Audi is still lacking a clear strategy for the U.S. market,” said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. “You’d expect more from a company with such outspoken global ambitions.”

Schwarzenbauer said Audi will keep up advertising outlays, which rose 15 percent last year. Spending included events such as television coverage of the Super Bowl and the inauguration of U.S. President Barack Obama.

Its German rivals and Toyota Motor Corp.’s Lexus brand, the top seller in the U.S. luxury segment, all benefit from larger customer bases and broader distribution networks. Audi relies on 130 brand dealers for 80 percent of U.S. sales, compared with 351 for Mercedes and 338 at BMW, according to company data.

As part of the 10-brand structure of its parent, Audi is limiting development costs more effectively than BMW or Mercedes by sharing spending with sister companies, said Stefan Bratzel, director of the Center of Automotive Research at the University of Applied Sciences in Bergisch Gladbach, Germany. An example is the A1, which will be based on the technical platform of Volkswagen’s Polo subcompact, he said.

Globally, Audi sold 870,600 vehicles in the 11 months through November, driven by sales in China, which overtook the U.S. as the largest car market last year. China is “a key pillar” in Audi’s plan to boost global deliveries to 1.5 million cars by 2016, the sales chief said.

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