Audi of America: No Slowdown in Sight

Special Coverage

State of Industry: North America

It would be hard to name an automotive brand that has navigated the difficult waters of the North America market better than Audi during the past few years.

Surely atop nearly everyone’s death-pool list in the late 1980s, when a sudden-acceleration scandal helped trim U.S. sales to a paltry 12,283-unit all-time low in 1991, Audi has risen from the ashes to become one of the country’s fastest-growing luxury marques.

Sales soared 23% to an all-time high 101,629 vehicles last year, and the brand easily will shatter that mark again in 2011. Worldwide, Audi is on a record pace as well, with sales through October up 18% to 1.08 million units.

In addition, a bevy of new high-end models, such as the flagship A8 and stylish A7 hatchback, are bolstering Audi’s stature in the market. Currently, about 13% of the brand’s U.S. sales are in the upper end of the luxury sector, and Audi is aiming to more than double that stake.

Overseeing that growth is Johan de Nysschen, who has led Audi of America for the past seven years. In an interview conducted via email, he expresses confidence in the U.S. economy for 2012 and declares the Audi global juggernaut “unstoppable.”

WardsAuto: Has the economic recovery taken hold, or do you fear the U.S. is headed for a double-dip recession?

De Nysschen: We interpret several leading indicators as signaling positive economic development ahead. The luxury-car market is expected to show strong recovery in 2012, and Audi has been experiencing demand ahead of supply for a considerable period. We are very optimistic about the near-term future prospects.

WardsAuto: How would a potential dissolution of the euro affect Audi in the U.S.? Is the euro’s continued strength vs. the dollar and its uncertain future speeding up the timetable for a decision on whether to add production capacity in North America?

De Nysschen: We do not foresee the dissolution of the euro. Exchange-rate considerations are long-term issues and, while not unimportant, do not influence the production decision as much as the need to address global capacity constraints and the economic benefits of producing vehicles close to a major market.

De Nysschen: “Globally, the four rings seem unstoppable.”

WardsAuto: Audi appears on track for another record sales year in 2011, but are supply constraints still limiting volume in the U.S.? If so, will that continue to be the case in 2012?

De Nysschen: Audi has nearly doubled our share of the market for import luxury brands over the past five years. We have enjoyed strong demand for a period of several years and set another all-time annual sales record in the U.S. in 2010. So far this year, every month has been another all-time monthly sales record, and sales are almost 17% above our record selling pace of last year.

So we are supplying more product than ever before. Yet demand continues to surge. I have no doubt that we have missed some sales opportunities, perhaps as many as another 1,000 units per quarter.

WardsAuto: How do you see the vehicle-segment mix changing in the U.S. in 2012? How will your business be impacted?

De Nysschen: With the newly launched A8, A7, A6 models and improved supply of the Q7, Audi will experience a significant shift in the sales mix toward the more expensive models in the product range. I expect about 30% of our sales to comprise models above $50,000.

WardsAuto: Will the Q3 come to the U.S.?

De Nysschen: The project is under evaluation; no decision has yet been reached.

WardsAuto: What do you expect to be the next game-changer in vehicle technology?

De Nysschen: Game-changer is too dramatic. There will be ongoing evolution of technology across many parts. In addition to powertrain development of gasoline engines, we can expect wider application of clean-diesel technology, as well as further improvement of hybrids.

Battery technology will require a breakthrough regarding efficiency, weight and cost before it can become mainstream. Another big focus area will be vehicle-weight reduction.

WardsAuto: Audi entered Phase 2 of its brand development in the U.S. this year, pushing more upmarket with the launch of the A8, A7 and A6. How do you gauge your success so far?

De Nysschen: We are very satisfied. The previous-generation A6 had its best performance in the final year of its life. The new model is enjoying sales 50% above this.

A7 is a runaway hit. A8 already enjoys the same share of the D-Segment as the popular A4 and A5 models enjoy in their segments, despite offering only the V-8 gasoline engine at this time.

WardsAuto: Other than the economy, what is the biggest single threat to your business? In other words, what keeps you awake at night?

De Nysschen: I am very optimistic about the future prospects for Audi. Globally, the four rings seem unstoppable.

We have been the No.1 luxury brand in Europe for several years. We are now No.2 globally. We will exceed 1.3 million units in 2011. We are financially stronger than ever. We have established a solid platform on which to build our U.S. business. The product portfolio is exceptional. The residuals are rock-solid. The dealer network is engaged.

I sleep well at night.

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