Audi Credits Dealer Investments with Helping to Drive Strong 2010 Sales


Audi of America recently recapped its best sales year ever, highlighting how much franchise dealers invested in showrooms and specific markets that enjoyed strongest sales gains.

From 2008 until the end of last year, Audi indicated its dealers have invested approximately $171 million on completed upgrades. The company said that figure does not include land purchases and other expenditures.

In 2010, seven new Audi sales points opened in the U.S.

This year, brand officials estimated $35.8 million worth of additional projects are scheduled to come online.

“The level of investment by Audi dealers has been significant, especially when considering that much of it came in the midst of grave economic headwinds,” automaker executives surmised.

“But Audi dealers have expressed upbeat attitudes on the future of the brand in recent NADA Dealer Attitude Surveys,” they continued. “And despite the economic difficulties, their profitability is on the upswing.”

And when looking deeper into 2010 data, the manufacturer calculated the return on sales for exclusive Audi dealerships stood at a record 3.2 percent.

What executives called “hot spots” for Audi sales gains in 2010 included several metro areas spread throughout the nation. The top markets and their rises from 2009 sales performances include:

—Washington, D.C.: Up 58 percent.

—Orange County, Calif.: Up 50 percent.

—Miami: Up 45 percent.

—Dallas: Up 37 percent.

—Seattle: Up 35 percent.

—Houston: Up 29 percent.

—San Francisco: Up 29 percent.

—North New Jersey: Up 21 percent.

“Building the Audi brand has meant upgrading the customer experience at the retail level where people encounter it most frequently, other than in their Audi vehicles,” company management stressed.

“Building all-new dealerships off of the global Audi Terminal design philosophy, improving existing facilities or expanding space made available to the brand and its image has been a key initiative for Audi of America and its dealer partners,” executives added.

Overall 2010 Sales Figures

In what Audi declared to be the best performance the brand ever registered in the U.S., the company sold 101,629 vehicles, surpassing its previous best mark of 93,506 units sold in 2007.

The brand achieved that overall figure by posting its best-ever first, second, third and fourth-quarter sales totals, four record sales months in a row and eight record-setting months.

Beyond the amount of units moved, Audi determined that nearly every business measure improved in 2010, too.

“We are confident that the progress Audi has made with the American luxury car consumer only marks the beginning of our opportunities here,” stated Johan de Nysschen, president of Audi of America.

“Our aim isn’t sales supremacy, but to build the strongest premium brand that can be found in this market,” de Nysschen continued. “This means improving quality, treating Audi owners as valued stakeholders and working with our dealers to deliver an Audi experience that matches the sophistication of our products.”

Deeper Look into 2010 Performance

Audi declared its gains in market share came “the old-fashioned way, by earning it."

At the close of 2010, Audi said it held 8.6 percent of the U.S. imported luxury vehicle market, a segment also populated by Lexus, BMW and Mercedes-Benz. The penetration set a new record for the Audi brand and stood well above the 7.9 percent share Audi held at the end of 2009.

But brand officials contend they didn’t dramatically increase their share through deep discounts.

Based on Autodata estimates of average industry discounts, Audi computed that its incentive levels fell 16 percent toward the end of last year when compared against 2009 discounts.

“That placed the brand on the low end of the incentives offered by a luxury manufacturer, and it was a steeper decline than average incentives extended by the imported luxury car sector overall,” Audi stressed.

For comparison purposes, the brand indicated that on average BMW offered $748 more in average incentives, or roughly 23 percent more than Audi. The company went on to point out that the average incentives offered by Mercedes-Benz last year were 27 percent higher than those extended by Audi.

“Our incentives strategy fits squarely within that goal and it furthers our intention to strengthen the business foundations of our brand,” de Nysschen insisted.

Breaking down the Audi 2010 market share results further, officials revealed the brand held 9.4 percent of the U.S. imported luxury car market — compared with a 9-percent share in 2009 — and 7.2 percent of the import high group truck market — compared with 5.9 percent a year earlier.

Success of Two Particular Offerings

Discussing 2010 results, Audi's management culled out two specific aspects of its portfolio last year — the Audi Q5 and TDI diesel technology.

Executives discovered sales of the Q5 jumped 70.5 percent for the year. They believe that level ranked as the biggest sales increase in the small SUV segment.

Audi conceded strong demand left inventories of Q5 models at exceptionally lean levels. The company indicated nearly 72 percent of Q5 models available at dealerships in December found a buyer before year’s end. That left only enough models to handle demand for 12 days throughout the country and normal inventory levels range from a 45- to 55-day supply.

“There are a couple of ways to publicly measure the success of any vehicle: Sheer sales volume and sales momentum trends,” Audi explained. “The first measure can be deceptive. A manufacturer can generate huge volumes if it has available manufacturing capacity and the appetite to crank up lavish sales incentives.

“Then there is the picture that emerges with strong trend lines, where the success of the Audi Q5 crossover vehicle can be found,” company officials suggested.

When Audi introduced its first TDI model in the U.S. in 2009, the company admitted it was difficult to assess the American appetite for clean diesel vehicles.

“Unlike Europe where diesel is often the dominant engine choice, America harbored mixed memories of clattering diesels from the past,” brand executives shared.

“Funny what a difference a year makes,” they went on to say. “With fuel economy gains of up to 40 percent and one-third reductions in greenhouse gas emissions, U.S. consumers found that TDI provides a compelling environmental choice without any performance sacrifices.

In 2010, the company indicated TDI clean diesel technology made up 53 percent of all U.S. Audi A3 sales, and 43.5 percent of all Audi Q7 sales. Management added TDI models made up 47.8 percent of the sales for the two model lines combined — a key reason why Audi plans to at least double its TDI offerings in the U.S. market in the near future.

“The strong U.S. demand for TDI has also proven to be significantly higher than the 18 to 20 percent sales mix anticipated just a year earlier,” brand officials pointed out.

Other Facts about 2010 Performance

Audi wrapped up its year-end assessment by sharing a trio of other noteworthy achievements:

—Sales of the Audi R8 supercar increased 14.3 percent to give it a 5.6 percent share of its segment for the year. Officials claimed the Audi R8 supercar emerged as the only entry in it class to register a gain in sales volume.

—The Audi A6 won important comparison tests in leading U.S. automotive publications and gained nearly a full point of market share in its segment to 6.3 percent in 2010. Overall A6 sales rose 27.8 percent for the year.

—The nearly 70-percent increase in Audi A3 sales resulted in the largest gain for the year in its segment, officials suggested.

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