Audi Builds Brand Awareness, as it Plays Sales Catch-Up with BMW
BMW outsold arch-rival Audi more than twofold in July, a feat that has to sting. Audi's plan: To fight back by introducing a part of high-performance cars for the American market. In short, it's a play at brand awareness, a nebulous but effective strategy when it comes to getting people to buy cars.
While Audi has sold 65,055 cars so far this year, up 16 percent from the comparable period a year ago, BMW has left it far behind, with year-to-date sales of 169,641.
Audi is actually doing well in the U.S. market, with seven straight months of growth, but the Germans have the word "schadenfreude," and it can be interpreted here to mean they'll only be happy when BMW is eating its exhaust fumes.
Luxury and performance rivals
The German automakers have long gone at each other hammer and tongs to increase market share in the U.S., even publicly battling each other in ad campaigns on California billboards. (Audi advertised the new A4 with "Your Move, BMW," and the comeback was a giant M3 and a one-word caption: "Checkmate.") Now, both automakers need to be ever-more on their game because the Big Three are much sharper at producing both economy and performance cars. They've even invaded Europe with new lines of "world cars."
BMW is often the first brand speed-loving foreign car buyers think of, so Audi's latest chess move is to win hearts and minds in the segment by offering Americans high-performance cars previously sold only in Europe. That strategy will get high-end Audis on the covers of Road & Track and Motor Trend and build the company's image. Beginning this week, Audi will import the over-$55,000 340-horsepower TT RS and (next year) the RS 5 Coupe, a direct rival of BMW's segment-leading M3.
Audi hasn't sold any RS performance cars in the U.S. for five years. It's goals with the new vehicles are relatively modest: It isn't after big sales numbers, just a higher profile among car buyers.
Building awareness
Audi spokesman Mark Dahncke told me:
We won't offer an RS option on every model, just where appropriate. With the RS 5 and the TT RS we will add brand awareness and expand Audi's customer base, including the ability to attract current BMW owners. Five or six years ago, we were the number seven import luxury brand, but now we're number two. And for BMW buyers, we're the number one cross-shopped alternative -- the brand they're looking at.Dahncke's awareness claim is backed up by Edmunds.com data that shows that 5.5 percent of U.S. consumers considered an Audi last month, compared with 3.9 percent in 2007. That building awareness is definitely helping sales -- in July, Audi enjoyed a record month, with sales that only look bad when compared to BMW's.
Low-volume performance cars have their uses. The RS 5 will slot next to the R8 as an Audi glamor car, and it will also add somewhat to the carmaker's profitability -- which trails BMW's. According to Bloomberg, Audi has been working on ramping up its transaction prices, with the average selling price up 9.1 percent since January 2010 to $48,127. Meanwhile, BMW has seen some price erosion, though it still tops Audi at $52,552.
BMW's fuel economy/green base
BMW isn't standing pat while Audi makes its moves. The Bavarian automaker has played it smart on the American market by establishing its 1 Series as it also sees its largest volume in the compact segment. The 3 Series easily outsells all other BMW cars, and the X line of SUVs, too. It's the top-of-the-line 7 Series that's lagging, down 27.5 percent on sales of just 655 in July.
And BMW also has fuel economy bases covered with the Mini, which enjoyed a whopping 36.6 percent year-to-date sales increase, to 34,527 (compared to 25,279 in the same period of 2010).
BMW and Audi both have electric cars, but BMW's plans are much more advanced. It launched its new i division last week, with the i3 "megacity" vehicle and the Fisker-chasing i8 plug-in hybrid.
Audi's latest moves won't earn it bragging rights over BMW anytime soon, but they make sense as an interim play. With the current success of fuel sippers, a smart choice might be to bring the tiny and super-cute A1 to the U.S. Despite hints, Audi denies that's in the cards, citing exchange rate woes.
Audi could get around that by building the A1 in the U.S., but Dahncke says a U.S. factory isn't in the cards right now, either (though it's always being discussed). Considering that BMW, Volkswagen and Mercedes all make cars in America, you can bet that Audi is talking about following suit.
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Car reviewers are likely to run out of superlatives for the Audi RS 5, caught on video going through its paces:
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