German car manufacturer Audi is a fantastic example of a manufacturer that has remained strong during a tough modern era for the 21st century car industry. In a time when environmental and economic issues are at the forefront of a car buyer’s decision making process, Audi’s ability to adapt to changing market expectations is emphasised by its major financial success. So how has it remained so strong? And why has it grown when others have fallen? This post will aim to answer the question of why Germany’s Audi is now one of the world’s most influential carmakers.
Since its birth in 1910, Audi, or AUDI Automobilwerke GmbH as it was first named, has grown into an innovative, world leading car manufacturer. Producing ground-breaking vehicles that have helped to develop the automotive world into what it is now, in many ways Audi is a long term story of a success. Reflecting this are its increasing car sales, with growth of 11.7% to over 1.4million cars between 2011 and 2012, showing strong expansion even during time of recession (AUDI AG. 2012).
This success is driven by many factors, but of course being an automaker its production of pioneering cars is no doubt a main contributor. Look back to the 1980s for example, when Audi’s four-wheel drive Quattro was in the industry spotlight. This car was the first production performance vehicle to be fitted with four-wheel drive, providing excellent grip in almost all scenarios and class leading performance that could worry even the fastest Porsches (Kirchberg, P et al. 2001). Even fast forwarding to today and Audi’s diverse range of cars feature a wealth of technological advances, such as its complex cylinder deactivation technology, something we’ll touch on shortly.
But perhaps one of the biggest reasons Audi can sell so many of its pioneering cars, is through the utilisation of motorsport to demonstrate its cars’ advanced engineering qualities. In the 80s Audi entered its Quattro into the World Rally Championship, where it dominated the sport and acted as a fantastic promotional tool for the road going version (Kirchberg, P et al. 2001). Even today Audi still uses its success in motorsport to promote current brand trends. A great example can be seen with a multitude of racing wins in the famous Le Mans endurance races, having acted as a catalyst for engine development and promotion of Audi’s current range of efficient diesel engines. Its R10 TDI Le Mans racer for example, was the first car to win the race under diesel power as well as being a source of innovation for diesel development, something that no doubt saves money on research and development as it trickles down into Audi’s road cars.
This success on track hasn’t just been instrumental in promoting the brand as a performance marque however; it has also been useful in presenting the carmaker’s green credentials to the world. Today, increasing influence from the world’s governments for manufacturers to lower their CO2 emissions has seen a rise in fuel prices and tax rates for inefficient cars. Developing cars that are both efficient and reduce their emissions is therefore of significant importance to car manufacturers like Audi. This is where the creation of its R18 e-tron quattro racing car has been so effective. The race winner features a high performance diesel engine and hybrid motor, which in the fast paced world of motorsport are pushed to the limits both in terms of performance and development.
This development is effective in improving Audi’s road going hybrid technology, saving both time and money in research thanks to motorsport serving as an effective test bed for innovation. The resulting technology can now be seen throughout Audi’s road car line up, with racing developed technology appearing even in the marque’s smallest vehicle, the A1. Perhaps a great example of Audi’s ability to shift entirely to constantly changing market conditions, the small, cheap to run A1 is available with advanced cylinder deactivation technology, meaning it is able to offer practical petrol performance with reduced emissions, catering for a far wider range of driving conditions (Ingram, R. 2013). The same technology is of course used on larger vehicles in the Audi range too, with its RS6 producing a phenomenal 556bhp and 516lb-ft of torque, but still returning an impressive 28.8mpg combined when running on just three of its six-cylinders (Wilkinson, L. 2013).
Unsurprisingly though, consumer demands of the 21st century also cover a large amount of areas outside of environmental issues. Safety is often seen as a key influence in deciding what car to buy, and thankfully for Audi, the independent organisation responsible for crash testing all new cars, the Euro NCAP, have rewarded their cars with excellent results. Five star safety results are crowned with class leading crash standards for the Audi Q6, meaning safety conscious consumers are no doubt attracted to the Audi line up (Audi online. 2012).
Unfortunately however, there is a chink in Audi’s mighty armour. Reliability, something the marque was once praised for, is probably now its Achilles heel. With consumers looking to reduce the costs they spend on car maintenance in times of recession, Audi’s poor reliability scores of late are no doubt a hindrance to their otherwise large amount of success. Average maintenance costs reached £525.49 between 2012 and 2013, meaning Audi cars can be worryingly expensive to run (Boyce, L. 2013). Nevertheless, judging by increased sales and growing profits, it seems as though consumers are unaware of this issue and most likely blinded by the often-misguided bulletproof image of German engineering. From Audi’s point of view though, this is no bad thing of course.
This strong image can’t solve all of Audi’s problems though, and facing the logistical challenges that being such a large manufacturer bring, requires a much more calculated approach. Audi, being one of the world’s largest car producers, has to supply vehicles to countries across the globe, with differing demands and varying vehicle specifications offered in different regions. One of the key methods Audi has utilised in ensuring it can cater for these demands with minimal cost, is in ‘regionisation’ (Holweg, M. 2009). Since the 1990s, where emerging markets such as those in Asia have demanded a growing number of cars, Audi has shifted production from being entirely European, to reaching much farther reaches of the world. Initially, sending ‘completely knocked down’ cars to regions such as Asia for construction was the most cost effective method (Kirchberg, P et al. 2001), but with stronger economies Audi is now able to outsource some of its manufacturing to elsewhere. This has resulted in Audi cars being constructed from scratch abroad, China being one of the most notable locations (Kirchberg, P et al. 2001).
In conclusion, it really does seem as though Audi has managed to continue developing and growing despite the world’s economic struggles of late. Through the production of advanced vehicles, increased sustainability and effective marketing, Audi has seen demand grow substantially on an international scale. To cater for this, careful business decisions have resulted in Audi producing vehicles in several regions of the world, lowering transportation costs and stretching the reach of the brand even further. These effective business decisions, along with a bit of luck thanks to misconceptions of a ‘bulletproof’ Audi, have meant that Audi AG is now a major success story of how to grow your car company, even through these tough times of global recession.
All photographs are taken from Audi Media Services and are free for editorial use.
- AUDI AG. 2012. Audi Group Key Figures. Audi 2012 Annual Report. AUDI AG: Ingolstadt.
- Audi online. 2012. Audi Q3 is top of the class in 2011 Euro NCAP crash tests. Audi.co.uk [Online:] http://www.audi.co.uk/about-audi/latest-news/audi-q3-is-top-of-the-class-in-2011-euro-ncap-crash-tests.html
- Boyce, L. 2013. Honda named most reliable car for eighth year in a row while Bentley hits back at claim 86% of cars suffered faults last year.ThisIsMoney.co.uk [Online:] http://www.thisismoney.co.uk/money/cars/article-2377617/Most-reliable-cars-2013-Honda-tops-league-Bentley-comes-last.html
- Harris, P. 1999. Sutton’s Photographic History of Transport: Audi. Sutton Publishing Ltd: Stroud. p16
- Holweg, M. 2009. The Evolution of Competition in the automotive Industry. In: Parry, g & Graves, A. 2008 ed. Build to Order: the Road to the 5-Day Car. Springer: UK. p22.
- Ingram, R. 2013. Audi A1 and A3 now available with cylinder deactivation tech. CarBuyer.co.uk [Online:] http://www.carbuyer.co.uk/news/85454/audi-a1-and-a3-now-available-cylinder-deactivation-tech
- Kirchberg, P et al. 2001. A History of Progress: Chronicle of the AUDI AG. AUDI AG: Ingolstadt. p230-233, 264-266, 247.
- Wilkinson, L. 2013. Audi RS6 Avant Review. The Telegraph online. [Online:] http://www.telegraph.co.uk/motoring/car-manufacturers/audi/10157456/Audi-RS6-Avant-review.html