WASHINGTON – Since moving its North American headquarters to Herndon, VA, a suburb of the nation’s capital, Audi sales have soared 122% in the Washington/ Baltimore area, says Scott Keogh, president of Audi of America.
“We thought Washington was the place to be,” he says at the annual auto show here.
Overall, Audi has boosted its portfolio from 35 to 63 model variants since 2006. The brand has jumped from No.7 to No.2 in luxury cars cross-shopped in the U.S., and its average transaction price has climbed $10,000 per unit, Keogh says. “We no longer have to sell cheap.”
Audi sold a record 139,310 units in 2012, compared with 117,561 prior-year. January deliveries also set a record this year, up 7.5% from year-ago to 10,056, the auto maker says.
“We're going to break another (total sales) record this year,” Keogh tells WardsAuto in an interview. “It took us 40 years to reach 100,000 units.” Audi predicted some time ago that it would reach 200,000 units by 2020. “We'll do it in significantly less time than that,” he says.
Audi's plan for growth includes building pricing power. The current inventory is down to a mere 37 days, Keogh reveals. He says he has no intention of importing a mass of cars and pushing them on dealers, a move that would cause prices to plummet.
Keogh says Audi's biggest opportunities lay at the lower end of its portfolio, even though sales of the A8 and other higher-priced models have been soaring. The auto maker plans to bring an A3 sedan next year, and he believes that will boost brand sales significantly.
Audi currently only sells an A3 sportback model, which likely has the highest diesel penetration of any car sold in the U.S., he says. About 55% of A3 buyers choose diesel. Diesels account for half of the Q7 cross/utility vehicle sales as well. The A6, A7, A8 and Q5 will get diesel engines this year.
Keogh claims that since 2009 buyers of Audi diesels have saved about 4.6 million gallons (174 million L) of fuel and emitted 22,000 fewer tons (19,958 t) of CO2, while saving $26 million in fuel costs. He urges government bodies to open high-occupancy lanes in cities that have them to diesel-fueled vehicles and also would like to see a reduction in diesel-fuel taxes.
The Audi chief says the brand continues to seek improving the power and prestige of the brand, and that the strategy is paying off because the auto maker is selling more high-end cars.
“Our brand power is increasing, and we see dramatic opportunities (to boost sales),” Keogh says, pointing to the number of conquest sales Audi is capturing. For every sale Audi loses to BMW, it wins over two BMW buyers.
It's even more dramatic against the Japanese luxury brands, Lexus, Acura and Infiniti. “We take three of those owners to every one we lose to them combined.”
The future also looks promising for Audi because it has the youngest demographics in the luxury segment, which is why Keogh believes the A3 sedan will become the third pillar of the brand’s volume. “It will be a home run.”
He insists Audi makes money on small cars, unlike its competitors. The A3 sedan, for example, will be built in Hungary, and the factory Audi is building in Mexico for Q5 production should help boost sales of that popular model. There are no current plans for Audi to source cars from Volkswagen's U.S. plant.
Responding to a question of how big Audi can become without losing its cachet, Keogh says “when you lose your pricing power, you lose exclusivity. That's a place where you've gone too far.”