Moving Upscale, Audi is Gunning for BMW, Lexus and Mercedes-Benz
NEW YORK -- Audi (VLKPY.PK), which has been focused on selling cars like the Audi A4 in the $30,000 to $40,000 range, is trying to move up in prestige and sell more cars in the $70,000 to $90,000 range, in Mercedes-Benz (DDAIF.PK) territory.
"When you're able to get people to make that kind of commitment, you have established yourself as a real premium brand in the U.S. marketplace," said Loren Angelo, department manager, brand marketing at Audi of America. He gave a presentation here July 15 to the International Motor Press Association. In terms of pricing and the pursuit of prestige, the BMW (BAMXY.PK) brand has followed a similar trajectory in the United States. Mercedes-Benz is the traditional heavyweight in the high-end category.
The Mercedes-Benz "prestige" image is built around the top-of-the-line S-Class sedan. BMW's "performance" image is centered on the entry-level 3 Series. It's taken BMW decades to acquire a more prestigious image, building up sales of its more expensive 5 Series and 7 Series. The grass is always greener, and in the meantime, Mercedes-Benz has been cultivating more of a performance image and trying to make itself more "accessible."
Audi's U.S. image is centered on its entry-level A4 model. To boost its upscale image, Audi has new versions of its bigger and more expensive A6 and A8 models in the pipeline, plus a sexy, all-new Audi A7 model due in the spring of 2011. Audi has also added crossover SUV models like the Q5 and the Q7. All of these new models are being introduced with much higher-profile advertising and marketing, including big splashes like advertising on the Super Bowl.
Audi's goal is to become the "No. 1 Premium Brand by 2015," a goal that Angelo reiterated. On the face of it, that would require Audi to more than double its U.S. sales, to beat Mercedes-Benz, Lexus (TM) and BMW.
Angelo said Audi has markedly increased its awareness, favorable opinion and consideration in the past couple of years. In the typical purchase funnel model, those "upper funnel" metrics pay off in increased shopping and sales. Indeed, Audi's U.S. sales in the first half were up 28 percent from a year ago, to 48,440, according to Autodata.
The trouble for Audi is, Mercedes-Benz, Lexus and BMW all topped 100,000 in the same period. Also, it's a truism in sales that a brand can go upscale and gain prestige or stay downscale and gain more volume, but not both, and Audi is proposing to do both.
The first time I heard that it was Audi's goal to be No. 1 was more than two years ago at the 2008 Detroit auto show. At the time, Audi executive couldn't have been any more explicit that outselling Mercedes-Benz, Lexus and BMW was exactly what they had in mind.
Before long, cooler heads at Audi started hedging what it meant to be No. 1. For instance, they told me if they were No. 1 in customer satisfaction, or maybe loyalty, that would still count, but I know what I heard. Audi would probably never admit it bit off more than it could chew, at least not in the time allotted, but Audi seems to be having a good time giving it the old college try.
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Photo: Audi