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Audi
The red-hot Q5 compact crossover SUV.
By Dan Carney
Despite this year’s weak economy, Audi is blazing a trail through the nation’s premium automotive segment.
The company celebrated Thanksgiving this year with special cause: The automaker had already topped 2010’s record U.S. sales of 101,000 cars with more than a month to spare.
Audi still trails sales leaders such as Lexus, BMW and Mercedes, which each sell about twice as many vehicles in the U.S. each year. But Audi started with virtually nothing, so weak was the company’s U.S. presence a decade ago.
And like Hyundai in the affordable car market, Audi’s momentum is frightening to behold for competitors, even if they currently outsell the sometimes-overlooked German brand.
Audi of America president Johan de Nysschen estimates that the company will sell 117,000 cars in North America by year end, and he reckons they could have sold 10,000 more if the factories could meet demand for its most popular models.
A normal supply of new cars in a manufacturer’s pipeline is about 60 days’ worth, de Nysschen explained. Audi’s supply averages in the low 20s, and the red-hot Q5 compact crossover SUV has a 14-day supply. Keep in mind that it takes Audi 11 days on average to receive, prep and ship cars from the port to its U.S. dealers, so the Q5 is flirting with the theoretical least supply possible in the company’s system, and the larger Q7 is nearly as sought-after.
These additional sales have strengthened the hand of U.S. Audi execs when dealing with the home office in Ingolstadt, Germany. Previously, specialty sport models in the company’s RS line were not developed with U.S. requirements in mind because it wasn’t worth getting all the necessary government approvals to sell a few image-pumping models.
“Now the brand is strong enough to hit the necessary sales volumes,” remarked de Nysschen. So while the U.S. previously sometimes received no RS models at all, “The U.S. is now in the development plans for all future RS models,” he said.
The high level of demand for new Audis has another consequence: higher prices for used Audis. When the company sold few cars, its residual values were weak, but that situation has reversed.
“Strong residuals have become a positive differentiator for us,” de Nysschen said.
So, with strong U.S. demand for crossover SUVs and exchange rates that make importing the vehicles from Europe unattractive, surely Audi is plotting where to break ground on a U.S. assembly plant, as BMW and Mercedes-Benz have already done.
But no, such decisions take time, and Audi’s Volkswagen parent company has just launched its own U.S. plant in Chattanooga, Tenn., to build Passat family sedans. Given the time the Germans will want to study the progress of the VW plant, a decision regarding adding an Audi plant is still a few years off, de Nysschen said. If they decide to go forward, Americans would be able to buy U.S. Audis no sooner than “late in this decade,” he said.
Meanwhile, Audi is making investments in manufacturing capacity for some of its suppliers, hoping to boost production. That is small solace to fans of the company’s latest RS-spec hot-rod, the TT-RS. The whole first year’s allotment of 1,000 cars for the U.S. is already sold out.
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No offence but I would rather have my Audi built in Germany rather in the US. I had my share of Dodge, Ford and GM made cars throughout my life. The two best cars I have ever owned have been the Passat and now my Audi A6 a total of 12 years now and counting.
I will never buy an American car again. If Audi opens a plant in the US then I move over to another European car maker.
That's true , you buy a german car it better be made in Germany .
I got mine made in Munich , Germany -2011 BMW 335d. The best car I had so far !
flash8, you're right. My last "American" car was a 1979 Plymouth Horizon with a 1.7L inline 4 Volkswagen/Audi engine and transaxle. That thing left me stranded and needing a tow at least 5 times over the course of time that I owned it. It was after that that I vowed never to buy a Volkswagen/Audi product again.
My car after that one, an Isuzu Rodeo, was effectively totaled when the General Motors 4L30-E automatic transmission failed. That transmission was built in Strasbourg, France, and guess which other brand of car used that same transmission? BMW.
Terrible "American" products, for sure.
I had an Audi 100LS, back in the 70s. Best car I've ever owned.
I've owned Chevy's, Ford's and Dodge/Chrysler products for 34 years. Each vehicle has run for more than 150k miles with zero major issues. I think the most expensive repair was an AC compressor failing on my Celebrity at 140k miles. Yeah, a Celebrity. One of Chevy's worst cars, but I took good care and living in a moderate climate, I drove it until the engine failed at 177k miles.
My buddie owned a repair shop specializing in German cars. He told me the Audi's were the worst cars of any to repair by design. Said he would never own an Audi.
I love their look, but I think it is a rich man's car. My 300c with a hemi is just the right mix of comfort and speed.
Audi's are great cars. I love my Volkswagen. Its really unfortunate that not one of the American brands makes a car that has the road feel of Volkswagen/Audi or BMW. The closest thing is Ford and they don't really make a model that feels sporty like the Audi line. The Mustang is steeped in old muscle car tradition and still feels to drive like your dis-attached from the road.
I was hoping to buy a new Audi until I looked at the reliability ratings as compared to Acura and Lexus, as shown in Consumers Report (a survey of thousands of actual car owners). Will take a second look in a few years, still sticking with my Acura TL.
@flash8 and Jaga-1147543
Not sure what your point is. Just because the big three couldn't engineer a proper car doesn't mean Audi can't build a indentical plant in the US and produce an identical product as they do in Germany. Essentially producing here means lower cost for Audi and you. Oh, and it is still possible for them to produce a garbage product in Germany, ask VW and Mercedes, and BMW, they've all had their fair share.
Compare the two cars , one made in Germany and one made in US - totally different quality .
Same thing I noticed with Toyota. Had one that was made in US that was pure garbage . The one I have now ( second car for winter ) it's made in Japan and never had a problem .
Do your research and you will find that americans STILL can't build quality cars
I find it hysterical that you are all blaming American Cars on their poor / lack of Craftsmanship while I'm willing to bet that 90% of you all LOVE the BIG UNIONS that pay those horrible workers RIDICULOUS top dollar salaries and benefits for their lack of craftsmanship. Made in the USA used to mean quality, care, pride and price.....
Having owned nothing but Audis since 1984, I don't understand what has taken so long for Americans to wake up. The styling, interior design and most of all quattro all-wheel-drive are phenomenal. Every Audi I have had went at least 80K miles, a 1990 V8 went 160,000 and sold to someone I know who is still driving it. My current 2003 Allroad has nearly 160,000 now. Though not as trouble-free as the V8, it is the best car I have ever owned.
As for American cars, my last was in 1973 (Oldsmobile) and I will likely never own another US brand car. They just aren't that interesting to drive, forgetting the lack of durability.
It seems a bit extravagant and bodacious given the pretensious commercials Audi runs to say that a car company selling 100K cars per year has blazed a trail into the American market with premium vehicles. At best, they are a pricey alternative to lower end BMW's, Mercedes, and Jaguars. Clever & strick allocation of new models by Audi made in Germany force prices up, even on older used models. This is the equivalent of Wonder Bread asking higher prices for its day old bakery.
Simply selling excess German car capacity in the US doesn't make for a trail blazing business plan. Failing to develop their portfolio of vehicles without US requirements in mind because it wasn't worth getting all the necessary government approvals to sell in the US, isn't a way to expand globally here. Moreover, lacking local manufacture will always throw Audi Dealers into severe allocation, especially for the hot products. Committment to the American Car Market as a manufacturer involves more than rhetoric from headquarters in Munich. The longterm sustainability of the vehicle's badge in the US has become important. Just ask owners of Oldsmobile, Pontiac, Saturn, Hummer, Peugeot, and other defunct brands.
This bright flash of sales in 2011 may not be any more than a reflection of the current economic circumstance here. The longer viability of the Audi line will depend on how they sculpt their portfolio to meet US market requirements and prices competetively. There is nothing more than an Audi parts warehouse and sales team here, so acquisition US operations by a domestic manufacturer is highly unlikely.
So, congrats to Audi for their spike in car sales this year. As long as the US car industry stays in the toilet, this German importer will do well.
Not sure why there is all of the praise for German quality vs US. The German autos consistently have the worst reliability in the industry. Anecdotal evidence aside, it appears they make poorer quality cars from a reliability standpoint.
I've never owned an American car until earlier this year when I bought a Ford. What a huge mistake did that turn out to be! Nothing but software crashes on Sync (gotta love Microsoft), botched fitting on interior elements, just a disgrace. I will not buy American again until they get their act together.
I would not touch anything that is associated with VW. I bought a brand new 01' VW Jetta VR6 & that was the worst vehicle I have ever owned. The whole braking system failed at 4K miles & my cruise control failed at 13K & to make things worst the customer service was the worst I have ever experienced. The factory warranty was only 2 yrs/24K. The vehicle had a 176 hp engine but got a hwy 27 mpg. My 10' Acura TL has 280 hp V6, but gives me 29 mpg hwy. VW/Audi/Porsches are a joke & garbage when it came down to reliability. Because of VW, I will new even consider a German car!
I have a 2010 VW Jetta Sports Wagen TDI with 23K miles. Not a problem with it. My milage since I have had the car is 41 mpg and that is city as well as highway. I have gotten 50 mpg on the highway when I do not have to use air.
The last portion of that article has me concerned in terms of buying future Audi's. Just when it looked as if Audi has fixed their reliability perception problem, they want to start building them in America?
As much as I want my fellow Americans to have jobs, including car factory jobs if they want them, there's a reason why I bought a German car made in Germany, and why I didn't buy a car made in America.
I won't buy another Audi if it's made in America.