Commentary

Looking To Become Top Luxury Brand, Audi Will Invest Additional $2 Billion

Audi said Saturday that it would spend about $29 billion over the next five years — $2 billion more than it previously planned — to upend BMW at the top of the luxury car heap by 2020 with new models, improved technology and an expanded global production network.

The company intends to expand its model portfolio from 50 to 60 models during that time, reports RTT News. “A main focus will be on new models in the C and D segments. Audi also intends to expand the successful Q family.” 

In addition, Audi announced that it would produce two electric vehicles by 2018. Audi CEO Rupert Stadler broke the news about the development of the launch of an electric sports car and a sports activity vehicle (SAV) in an interview with German daily Frankfurter Allgemeine Zeitung published on Saturday, reports Reuters’ Ludwig Burger.

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“The SAV would be a four-wheel drive with a range of more than 500 km (310 miles) per battery load, Stadler said,” Burger reports.

“We are making large investments in the innovative areas of electric mobility, connectivity and lightweight construction,” Stadler said in a statement announcing the initiatives. But, promised CFO Axel Strotbe, “Despite the growth in total investment, we will keep a watchful eye on the upcoming challenges and exercise the required cost discipline.”

“Seventy percent of spending will be assigned to developing new models and technologies such as emission-cutting plug-in hybrid vehicles,” Reuters’ Andreas Cremer writes. “More than half of the funds will be spent on Audi's two German factories in Ingolstadt and Neckarsulm which accounted for half the carmaker's nine-month output of 1.34 million autos, Audi said, confirming a Reuters story.”

“Audi, which already outsells BMW in China and Europe, is aiming to catch up in the U.S.,” according to a roundup in Automotive News. “In November, it unveiled the Prologue concept car in Los Angeles to showcase a more aggressive design.”

“The race tightened this year,” points out Bloomberg’s Claudia Rach. “BMW outsold Audi by just 42,600 cars in the first 11 months of 2014 compared with 54,600 a year earlier. Audi’s budget is part of Volkswagen’s 85.6 billion-euro investment program to beat Toyota Motor Corp. in global auto-industry sales.”

Indeed, “the investment program is part of a plan announced by parent Volkswagen last month, an Audi spokesman said,” reports Ulrike Dauer in the Wall Street Journal. “Volkswagen said in November it would boost capital investment to [$104.5] billion from 2015 to 2019, about [$1.34] billion above previous plans, largely driven by higher development costs associated with upfront investment in new technology needed to reduce CO2 emissions.”

“In early December, Audi reported that it is wrapping up a five-year run of record sales. For the last 47 of those 60 months, the Volkswagen subsidiary said it has enjoyed consecutive, month-to-month growth,” Quinten Plummer writes in Tech Times

“A fifth consecutive year of record sales reflects the results of steady investment in products and technologies alongside enthusiastic dealer partners expanding the brand profile across America,” said Mark Del Rosso, EVP and COO of Audi of America. 

In a test-drive of that “the multimillion-dollar, only-one-in-the-world” Prologue in Los Angeles earlier this month, Auto Blogs Steven J. Ewing concluded: “It's incredible to behold, inside and out. And while its future as an A9 coupe is still unknown, Audi's officials said the intention with the Prologue was to create something that could certainly be built — just like the Quattro from years ago. But nevertheless, the bits of the Prologue that will see the light of day should only further cement the German automaker's place as a luxury and technology powerhouse.” 

If it has its way, there’s no place like No. 1.

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