MOTORS INTERVIEW PETER SCHWARZENBAUER:One million sales in 2008 was an important milestone on the road to becoming the world's No 1 premium car brand, Audi's Peter Schwarzenbauer tells PADDY COMYN
LAUNCHING a new car is a challenge in the current economic climate, let alone a large luxury car retailing for six figures. But Audi has boosted its brand image with cars such as the forthcoming Audi A8 and the R8 supercar, to the extent that the German car maker looks set to sell 925,000 cars this year – in a market that is down 10 million cars worldwide.
Peter Schwarzenbauer joined Audi as the board member responsible for sales and marketing from Porsche in the US. He was given the task of ensuring the continued sales growth of the brand, while also improving sales in the important US market, where Audi had underperformed compared to rivals BMW and Mercedes-Benz. So has he settled into his new role?
“Whenever you start new in a company it takes a while to get used to it, but it was much easier than I expected. It was a very open-minded welcome into the company, so it was very easy for me to get settled in. The only complicated thing was the market. The headwind was pretty heavy and pretty cold.”
This change in the market was devastating for many brands but Audi’s drop in sales wasn’t as dramatic as it might have been. While they reached the one-million mark in sales in 2008, this year’s figure is likely to be around 925,000, which is up on earlier forecasts. The brand’s success in emerging markets is seen as important to this.
“Whenever we are judged on how we are doing, it isn’t always taken into account how we compare with other rivals and objectively we have had a pretty good year. China was really a factor. Back in January at the peak of the crisis China was also shaky and the forecast was for 5.3 million cars. From January to August things changed so much that the market now has a forecast for nine million cars. In China we have a big competitive advantage as we were the first brand to go there.”
The A4 and A6 are produced in China for that market and the Q5 is also set to be built there over the next few months. Audi now has the capacity to produce up to 200,000 units in China.
So how important was reaching one million sales to the Audi brand and when does Schwarzenbauer expect to see the brand return to these levels?
“This was one of the extremely important milestones in our long-term strategy of becoming the world’s leading premium brand by 2015. This plan was that in 2008 we would sell more than one million cars. Especially if you consider that the last quarter of 2008 was not an easy one, this achievement was remarkable. It will take two to three years to get back to this level. In 2009 the total car market is are around 51 million, 10 million cars less than last year.”
Audi’s line-up of cars has increased dramatically over the last five years, growing to 32 cars over a short period. Critics say the range is getting too confusing and Audi is producing cars for niches that don’t exist. Is this ever-growing range so necessary?
“I think that this is part of the success story of Audi. I believe that it will continue. People want something different from the mainstream. We would not have such high conquest rates without these niche cars. We have now 32 models in our line-up and by 2015 we will have 42 models. We just took this year to continue our investment plan. We invest €2 billion into new products. This crisis will help us compared to what our friends from Munich and Stuttgart are doing.”
Some of these new models coming down the line in 2010 will include the A1, expected to be revealed at the Geneva Motor Show in March, and the A7, which will be shown at the Moscow Motor Show in October. The A1 will compete with the Mini as a premium small car, but will having a car of this size and affordability irk the A8 or R8 customer who sees their car as something quite exclusive?
“I think it depends on how the A8 or R8 customer is treated,” says Schwarzenbauer. “The A8 customer doesn’t care if we have an A1; they would care if we treated such customers differently just because we had an A1.”
Audi expects to be the leading premium brand by 2015 and in Europe it has already overtaken BMW and Mercedes-Benz. Schwarzenbauer is accutely aware of the dangers of reaching that number-one spot.
“To become number one is always dangerous as your focus is different. As soon as you reach number one you don’t have anywhere to aim. We discuss a lot about what will happen when we achieve our goal.”
Schwarzenbauer sees the image of the brand as having improved greatly and one that is continuously changing. “Our brand is based on three pillars: sophistication, sportiness and progressiveness, and these are the main definitions of our brand and in particular the progressiveness means we are a more forward-looking brand and this gives us an advantage compared to our main competitiors.”
What about the success of the R8? Does it tread on the toes of the 911, a car now part of the family? “It was one of the most important brand decisions from a product perspective than any other model we have done. I believe that in the future you have to have both things. We consider the A8 as the sportiest sedan on the market but there will be more room for cars like the R8 in the Audi range. There is very little cross-shopping between R8 and 911 customers, according to our research.”
Responding to a trend within the industry for discounting, Schwarzenbauer is quite certain about the dangers of this. “In general we are against this crazy incentive war that is going on in many markets. It is, long-term, going to damage brands and residual values and value from a customer point of view. This over-ambitious volume plan, pushing volume with a lot of money into a market, destroys our business so we try to stay away on this and cut back on production so we don’t have an oversupply. We prefer to create a more natural demand for cars.”
Despite these notes of caution, there can be no denying the aggression of Audi’s march towards their aim to be the world’s premium carmaker. And with the never-ending assault on the market set to continue with the new A8, A1, RS5 and A7 over the coming year, the brand will cover every possible base in their race to the top.
