Audi brand to take back seat at show

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Bloomberg

An Audi AG A6 TDI vehicle sits on display during the Washington Auto Show in Washington, D.C., U.S., on Wednesday, Jan. 22, 2014. Audi, Bayerische Motoren Werke AG (BMW) and Mercedes-Benz are targeting at least a fourth consecutive year of record sales in 2014 as new compacts tighten the race among the German rivals for the luxury-car industry's lead. Photographer: Andrew Harrer/Bloomberg

Andreas Cremer Berlin

Just as Europe’s car market recovery shifts up a gear, the region’s biggest car maker, Volkswagen (VW), will have little new to display from its luxury brand Audi at this month’s Geneva motor show, other than a niche sports car.

Audi, which accounts for almost half of operating profit at German parent VW, will unveil a new version of the TT sports car, a model that accounted for less than 2 percent of the brand’s 1.58 million unit sales last year.

In contrast, rival BMW will showcase the latest model from its cutting-edge “i” series of electric cars, while Daimler’s Mercedes-Benz will present a new version of its best-selling C-Class, adding to a string of recent launches.

Having doubled model lines and deliveries over the past decade to narrow the sales gap on luxury car market leader BMW, Audi has not had much new on the stands for several recent industry gatherings compared with its rivals.

What’s more, overhauls to Audi’s top-selling A4 saloon and the Q7 sport utility vehicle (SUV), slated for this year, would be pushed into next year as the cars needed to be reworked, two VW sources familiar with the matter said.

That is leading some analysts to question whether Audi can maintain its strong sales growth of recent years and meet its goal of overtaking BMW by 2020, which in turn could torpedo VW’s drive to become the biggest vehicle manufacturer.

“Audi is facing a barren spell just when Mercedes looks to take the fight back to the premiums,” said Stefan Bratzel, the head of the Centre of Automotive Management think-tank.

“The current order is anything but set in stone,” he added, referring to luxury car industry rankings.

After a six-year slump, Europe’s car market is back in growth as the region’s economy recovers from a debt crisis, as sales in the EU rose for a fifth consecutive month in January.

The luxury car industry avoided the worst of the downturn, thanks in part to strong demand from developing countries, and will be a key battleground as the European market recovers. Research firm IHS Automotive forecasts Audi will briefly snatch the luxury sales crown in 2017/18, as it aims to double its line-up of popular premium crossovers that includes the Q5 compact SUV.

But it expects both Audi and Mercedes to miss their goals to overtake BMW by 2020, with Mercedes staying in third place throughout the period.

While Audi’s new product line-up might look weaker by comparison, the significance of the latest version of the TT sports car should not be underestimated, Jonathon Poskitt, the head of European forecasting for LMC Automotive, said.

Developed in the mid-1990s after Audi’s ascension to the premium market, the original 1998 model won rave reviews for its curvy styling, inspired by the so-called Bauhaus design school that features simplistic, clean industrial looks.

“The TT projects a very positive image for the overall brand that’s still highly important for Audi,” Poskitt said. “It helps cement the cutting-edge appeal Audi is after.”

Based on VW’s latest modular platform designed to underpin as many as 4 million small and mid-sized vehicles, the new TT would feature sleek styling, lower weight and a top speed of 250km/hour, one of the VW sources said. While it will only ever be a niche car in terms of sales, such vehicles can be essential to building a loyal fan base. – Reuters


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