Audi AG's original TT won acclaim in 1998 for a sexy design that set a departure from its styling at the time. Fifteen years after Audi is counting on a change of the iconic coupe to produce the same.
The first TT bolstered Audi’s popularity and put Bayerische Motoren Werke AG and Mercedes-Benz on notice that the Volkswagen AG brand was a full-fledged opposition. The bright red TT revamp that rolled across the stage tonight in Geneva at a gala event for 1,000 journalists is meant to differentiate Audi from others.
After almost tripling sales in the last 10 years with makes such as the A3 compact, R8 sports car and Q7 sport-utility vehicle, the fast progress at VW’s largest profits contributor is slowing. Industry experts now point to Daimler AG's Mercedes as the luxury-car maker displaying the best model innovation and argue that Audi designs currently so closely mirror one another that it’s hard to tell them apart.
“The criticism Audi receives is justified,” said Lutz Fuegener, a transportation design professor at Germany's Pforzheim University. “When an Audi appears in the rear-view mirror these days, figuring out which model line it is has become quite difficult. It’s time for Audi to come up with something more courageous again.”
Audi designs in recent years have been dominated by a huge front grille, dubbed the singleframe, with design distinctness between vehicles becoming less pronounced as the world’s second-biggest maker of premium cars opted for a conservative approach meant to avoid alienating established purchasers.
Management Alterations
That may be about to change. VW Chairman Ferdinand Piech and Chief Executive Officer Martin Winterkorn, both of whom previously manage Audi, are shaking up the Ingolstadt, automaker based in Germany with an overhaul of top management, including naming fresh model and development chiefs.
Piech and Winterkorn, who were driving forces behind Audi’s past innovations, including the Quattro four-wheel-drive system and lightweight construction using aluminum, in the last two years have replaced five of Audi’s seven board members. CEO Rupert Stadler and Chief Financial Officer Axel Strotbek are the only two who have kept their posts.
Stadler states that this is just the beginning and he’s embarking on the largest spending spree in the automaker’s history to show to his critics that they are wrong. Audi will invest 22 billion euros ($30.4 billion) in the next five years, with 70 percent going toward new technology and products, and most of the rest to expand manufacturing.
“Audi is for sure the most progressive brand in the premium segment,” Stadler said in an e-mailed response to questions. “You have to differentiate between what is promoted well and what is being offered for years without much fanfare.”
New Designer
Winterkorn has altered Audi’s research and development chief twice since 2012, and this year replaced Wolfgang Egger, leader of Audi design since 2007, with Marc Lichte, who was accountable for the exterior look of VW brand cars.
Wolfgang Duerheimer, who ran VW’s Bentley marque, lasted less than a year running Audi R&D before Winterkorn parachuted in his close confidant Ulrich Hackenberg.
Hackenberg immediately revived a project to build an electric version of the R8 that Duerheimer had canned. He’s since then pitched to Audi’s board small-scale production of the model. Stadler said in January a decision will likely come in the first quarter.
BMW meanwhile is miles ahead. The world’s top seller of premium cars rolled out the i3 electric city car in 2013, with demand already outstripping production, and will bring to market the i8 plug-in hybrid racer later this year.
BMW Electrics
The i3 is the first mass-produced model built out of carbon fiber, a material thinner than human hair yet tougher than steel. Audi, instead of building a pure electric, has opted to introduce a plug-in hybrid version of the A3 later this year.
“Audi’s products just aren’t as exciting anymore, and BMW has gained a technological edge with its electric cars,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler who recommends selling VW shares. “It’s a problem.”
While Audi has a goal of becoming the biggest maker of luxury cars by the end of the decade, analysts predict that this year No. 3 Mercedes will make sales gains on Audi and that BMW will defend its lead. Industry forecaster IHS Automotive estimates Mercedes will narrow the gap with Audi to 89,500 cars in 2014 -- from 134,700 last year -- and that the two will run neck-and-neck in 2015.
