Audi
The red-hot Q5 compact crossover SUV.
By Dan Carney
Despite this year?s weak economy, Audi is blazing a trail through the nation?s premium automotive segment.
The company celebrated Thanksgiving this year with special cause: The automaker had already topped 2010?s record U.S. sales of 101,000 cars with more than a month to spare.
Audi still trails sales leaders?such as?Lexus, BMW and Mercedes, which each sell about twice as many vehicles in the U.S. each year. But Audi started with virtually nothing, so weak was the company?s U.S. presence a decade ago.
And like Hyundai in the affordable car market, Audi?s momentum is frightening to behold for competitors, even if they currently outsell the sometimes-overlooked German brand.
Audi of America president Johan de Nysschen estimates that the company will sell 117,000 cars in North America by year end, and he reckons they could have sold 10,000 more if the factories could meet demand for its most popular models.
A normal supply of new cars in a manufacturer?s pipeline is about 60 days? worth, de Nysschen explained. Audi?s supply averages in the low 20s, and the red-hot Q5 compact crossover SUV has a 14-day supply. Keep in mind that it takes Audi 11 days on average to receive, prep and ship cars from the port to its U.S. dealers, so the Q5 is flirting with the theoretical least supply possible in the company?s system, and the larger Q7 is nearly as sought-after.
These additional sales have strengthened the hand of U.S. Audi execs when dealing with the home office in Ingolstadt, Germany. Previously, specialty sport models in the company?s RS line were not developed with U.S. requirements in mind because it wasn?t worth getting all the necessary government approvals to sell a few image-pumping models.
?Now the brand is strong enough to hit the necessary sales volumes,? remarked de Nysschen. So while the U.S. previously sometimes received no RS models at all, ?The U.S. is now in the development plans for all future RS models,? he said.
The high level of demand for new Audis has another consequence: higher prices for used Audis. When the company sold few cars, its residual values were weak, but that situation has reversed.
?Strong residuals have become a positive differentiator for us,? de Nysschen said.
So, with?strong U.S. demand for crossover SUVs and exchange rates that make importing the vehicles from Europe unattractive, surely Audi is plotting where to break ground on a U.S. assembly plant, as BMW and Mercedes-Benz have already done.
But no, such decisions take time, and Audi?s Volkswagen parent company has just launched its own U.S. plant in Chattanooga, Tenn., to build Passat family sedans. Given the time the Germans will want to study the progress of the VW plant, a decision regarding adding an Audi plant is still a few years off, de Nysschen said. If they decide to go forward, Americans would be able to buy U.S. Audis no sooner than ?late in this decade,? he said.
Meanwhile, Audi is making investments in manufacturing capacity for some of its suppliers, hoping to boost production. That is small solace to fans of the company?s latest RS-spec hot-rod, the TT-RS. The whole first year?s allotment of 1,000 cars for the U.S. is already sold out.
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