Audi worldwide market performance in 2012

Audi has gradually risen to a strong position within the global luxury car market, largely through an extensive model expansion programme. In the 1990s, Audi offered a handful of conventional saloon and estate models, but between 2001 and 2012 it has expanded its range of distinct models from 17 models to 41, adding sports cars, SUVs, cabriolets and high-performance derivatives, as well as moving into the small car segment with the A1.

Audi’s model proliferation has proved successful, with the company achieving consistent growth over recent years and setting new sales records in 2012, despite tough economic conditions in two of its main markets, Europe and North America.

In 2012 Audi sold around 1,455,100 cars worldwide, 11.7% more than the previous record set in 2011, according to provisional data released by the company. This figure surpassed the 2012 target, announced in the summer, of 1.4 million cars, largely thanks to strong growth in North America and Asia.

Deliveries exceeded the 2011 figure by more than 152,000, making it the second-highest jump in sales in the history of the company. That record was set in 2011, when Audi sales grew by 210,000 over 2010’s level. With around 110,400 deliveries (+0.8%) in December 2012, Audi reached again the strong sales total of the excellent final month of 2011.

'In 2012, Audi achieved new record totals in every region worldwide, including in Europe,' said Luca de Meo, Audi management board member responsible for sales and marketing. 'We managed to buck the negative market trend and continued to grow there, extending our lead as the strongest premium brand.' In Europe, Audi sold a total of around 739,000 cars in the past year, growth of 1.8% against a difficult market.

Battle for prestige brand leadership

Audi has in recent years significantly closed the gap with its two main German prestige rivals, BMW and Mercedes-Benz. BMW is still ahead – brand sales rose 11.6% in 2012 to reach a total of 1,540,085 vehicles, similar growth to Audi and also the best sales level in the history of the brand. But Audi has now overtaken Mercedes-Benz, which also achieved a new sales record in 2012 of 1,320,097 Mercedes-Benz brand vehicles.

Mr De Meo said new models had helped the sales expansion: 'Worldwide, our new models in particular gave us an extra lift over the past year, most notably the Audi Q3: It has helped the entire Audi SUV family become a mainstay of our success, now accounting for one-quarter of all deliveries for the first time.'

Global sales of the Q3 began in October 2011, so 2012 was its first full year in the market. In Europe alone, Audi sold around 78,700 units of its compact SUV in 2012. The larger Q5 also performed well. The SUV was the leader in its segment in 2012 with around 206,000 units delivered worldwide.

Mr De Meo also singled out the A6 Avant, another model launched in autumn 2011, as providing strong sales in Europe. Around 60% of A6 customers in Europe choose the station wagon version over the saloon: A6 Avant sales in the region rose by 38.9% to 63,100 in 2012.

European sales: differing fortunes

In major European countries, Audi experienced differing fortunes. In Germany Audi outperformed the overall market, increasing sales by 3.6% to a new high of 263,163 to give the company a market share of 8.6%, the highest in its history.

In France, in a contracting overall 2012 market, Audi France was able to repeat the previous year’s record sales. With 62,202 deliveries, up 0.3%, Audi maintained its leading position in the premium segment in France. However, the significantly worse economic situation in Southern Europe led to declining sales in Italy (down 17.0% to 50,085) and Spain (a drop of 11.7% to 36,139) in 2012. In both countries, however, the registration figures for Audi managed to hold their ground much better than the market as a whole.

The strongest performance came from the UK, where Audi has almost doubled its annual sales over the past ten years. Business in 2012 contributed to this performance with growth of 7.2% to 123,640 cars, again an all-time high. By comparison, Audi sold 65,552 cars in the United Kingdom in 2002.

North America – record sales

In the US, Audi established a new sales record in every single month of 2012 and further accelerated growth from 2011. By the end of 2012, 139,310 Audi cars had been shipped to the US, 18.5% more than in the previous year. Within the space of five years, Audi of America has increased its customer base by almost 50% (2007 deliveries: 93,506 cars).

Large car sales were particularly strong Stateside in 2012. Combined sales of the A6, A7 Sportback, Q7 and the flagship A8 model were up 39%. Sales of the A6 Sedan alone, the new generation of which was available at US dealers for its first full year in 2012, climbed to 18,998 units, a rise of 73.7% on the prior-year total.

Audi’s sales performance in the two other countries of the North American free trade region was similarly impressive in the past year: In Canada sales were up 18.6% at 20,000 units, and in Mexico up 17.7% to 9,482.

Strong growth in emerging markets

Audi experienced dynamic sales growth in Russia in 2012, with 33,512 cars delivered, representing an increase of 44.1% on the previous year. Russia is now among Audi’s top 10 sales markets worldwide, and was the fastest growing of the top 10. By comparison, Audi sales total for 2009 in Russia was 15,009 cars, less than half its current figure.

In China Audi remained the clear premium-segment leader at the close of 2012. With 405,838 deliveries in 2012, it broke through the barrier of 400,000 cars for the first time ever – having crossed the threshold of 300,000 units only one year earlier.

Main drivers behind the 29.6% growth rate were the Changchun-built models: Despite a model changeover in March, for the first time ever Audi sold over 130,000 of the long-wheelbase version of the A6 Sedan in China within the space of a year (132,872 deliveries). The A6L remains the top-seller in Audi’s Chinese model range and the most popular premium car in China. Q5, also built locally, was also a strong performer. In total, Audi sold 93,030 Q5s in China last year, a significant increase of 63.8% on 2011.

A number of other emerging markets also became increasingly important for Audi in 2012 thanks to their high growth rates. These include South Korea (up 46.0% to 15,100 cars); South Africa (up 15.5% to 16,771 cars) and India, where Audi brand sales rose 63.4% to 9,003 units. Sales in Turkey also put on a spurt of 17.7% to 14,487 units, making it one of more than 50 markets where Audi established a new sales record last year.

Investment to continue

Audi has announced plans to invest €13 billion over the next four years as it continues to seek growth in the face of a tough global economy. The investment will be both in the development of new vehicles and technologies as well as the completion of three new manufacturing plants.

Nearly €8bn will be invested into Audi’s two main German manufacturing plants at Ingolstadt and Neckarsulm as Audi modernises and expands its line-up and intensifies its efforts in the areas of electric mobility and lightweight design and construction.

Audi’s expansion plans should see the completion of the manufacturing site in Gyor, Hungary, later this year, followed by assembly lines in Foshan, China, in early 2014 and San Jose Chiapa, Mexico by 2016.

Target for 2020: 2 million Audis

Audi AG chief financial officer, Axel Strotbek, said investment in international production facilities was fundamental to the brand’s goal of becoming the world’s top-selling premium vehicle brand and boosting its sales to more than 2 million per year by 2020. 'We will keep investing large sums to pursue our growth strategy,' Mr Strotbek said.

Wolfgang Durheimer, Audi board member for technical development, added that the goal was to make Audi the “number one premium brand in the world by 2018-2020”, adding: 'We are about level with Mercedes-Benz and our next target is BMW.'

Model proliferation will continue, as will work on new, cleaner alternative powertrains: 'For Audi, one of the innovative and futuristic ideas we have is to bring a 1-litre/100kms (283 mpg) car to the market, that delivers everything an Audi should in terms of seats, space, comfort and connectivity,' added Mr Durheimer.

However, some projects look destined to remain unbuilt. It appears there will be no new A2, which was designed to revive the original 1990s A2 compact concept, while using electric and hybrid powertrains. And the R8 e-tron electric supercar has also been shelved. A number of hybrid models, using the e-tron nameplate, will be launched, including versions of A3 and A6. An A8 hybrid has already been released.

Global fleet structure

Fleet sales will continue to centre on mainstream models – A3, A4, A5, A6 and A7, with A1, Q5 and Q3 gaining in popularity. Europe remains the main fleet market – Audi claims nearly 50% of western European sales are to corporate buyers, with the UK being the leading market ahead of Germany.

Fleet sales tend to be structured nationally, but Audi does have frame agreements with some multinational customers, generally under the umbrella of the Volkswagen Group Fleet International (VGFI) business.

This highly successful business coordinates international key account sales of Volkswagen, Audi, SEAT and Skoda vehicles, and VW Group claims VGFI is market leader in the five largest individual EU markets – Germany, UK, France, Spain and Italy – in terms of key account business.

According to analysts Dataforce, a total of 155,433 VW Group vehicles were registered in the fleet market in the “big 5” markets in the first quarter of 2012. This included an increase in Audi sales of 2.9% against the same period in 2011 to 48,409 vehicles, making it number one key account premium segment sales in these markets.

European production network

Audi Group is headquartered at its main manufacturing centre in Ingolstadt, Bavaria, southern Germany, which is also home to the company’s main technical development, sales and administration functions.

The Ingolstadt plant (pictured left) builds Audi A3 and A3 Sportback, A4 saloon and Avant, A5 Sportback and the A5 Coupé, RS5 Coupé and Q5 models. In addition, the Ingolstadt factory also makes bodies for the A3 Cabriolet, the RS3 Sportback and the TT coupe and roadster.

The site covers an area of more than 2.6m m3 and employs around 34,000 workers. It accounts for around half of Audi’s total manufacturing capacity, having built 583,824 cars in 2011.

The other main German plant is the former NSU factory at Neckarsulm, where A4 Sedan and A5 Cabriolet, A6, A7 Sportback and A8 luxury saloon are manufactured. The manufacturing facilities at the Neckarsulm site comprise a new press shop, one aluminium-and-steel and two pure aluminium body shops, a paint shop and multiple assembly lines. In 2011, vehicle production at Neckarsulm totalled 265,622 vehicles, and around 15,000 people were employed at the factory.

Audi’s massive model expansion has resulted in the need for extra capacity. Some of this, specifically the Audi TT Coupé, the Audi TT Roadster, the Audi A3 Cabriolet and the Audi RS3 Sportback, are assembled at Audi Hungaria Motor Kft, in Gyor, Hungary. Vehicle manufacturing started at Gyor with the Audi TT in 1998, using painted body shells supplied from Ingolstadt. Vehicle assembly takes place in a 35,000m2 hall. Assembly of the Audi A3 Cabriolet was added in November 2007, while series production of the Audi RS3 Sportback began in 2011. Audi Hungaria had built 553,354 cars at Gyor up until the end of 2011.

Gyor is currently being expanded – construction on new assembly facilities started in 2011 and will open later in 2013, giving the plant the capacity to build 125,000 complete cars per year.

The main function of Gyor is the development and manufacturing of engines for Audi and other Volkswagen Group brands. Almost the entire Audi engine range is now built at Gyor, with production starting in 1993. Four-cylinder petrol and diesel engines are manufactured there, along with five, six, ten and twelve-cylinder units. It is one of Hungary’s major exporters and highest-revenue businesses. In 2011, Audi Hungaria produced a total of 1,883,757 engines and 39,518 cars.

European capacity expansion

In 2007 Audi acquired a further European production site, when it took control of the former Volkswagen factory in Brussels, Belgium, now renamed Audi Brussels. When volume production of the Audi A1 started in May 2010, the Brussels plant assumed the lead role in building the model – the first time the plant had done so in over 60 years of its existence. In November 2011, production of the Audi A1 Sportback was added. In 2011, Audi sold around 118,200 Brussels-built Audi A1s.

Daily capacity exclusively for building Audi A1 is 520 units. The production plant, including body shop, paint shop and assembly line, covers a site of 540,000m2, and there are around 2,400 employees. There is also an automotive supplier park at the site, established in 2005, directly linking suppliers to the production halls by bridge.

Further capacity is sourced from other VW Group plants. The Audi Q7 large SUV is built at the Volkswagen Slovakia plant in Bratislava. The SUV has been assembled by a workforce of more than 2,200 in Bratislava since the end of 2005. In total, 53,707 Audi Q7s were built there in 2011. Body components are shipped from Ingolstadt and Neckarsulm, while the engines come from Gyor.

The Q3 small SUV is also outsourced – this is built in the SEAT plant in Martorell, Spain. Production started in the first half of 2011, and a new body shop and assembly line were erected for the Audi Q3, with 450 latest-generation robots. Around 1,500 workers are dedicated to the Audi Q3 manufacturing project, and 2011 production was 19,654 cars – though the Martorell plant can build more than 100,000 of the cars per year.

Chinese manufacture

Audi has had a manufacturing joint venture in China with First Automobile Works (FAW), China’s oldest automaker, since 1996. It currently builds the Audi A4L and Audi A6L – special long-wheelbase derivatives of the A4 and A6 that are specifically adapted to the Chinese market, as well as the Q5 SUV. The first Audi A6L appeared on the Chinese market in mid-2005, followed by the A4L in 2009 and the Q5, from CKD kits, in 2010.

China became Audi’s largest individual market for the first time in 2011, when more than 310,000 vehicles were delivered, an increase of 37% on 2010. Audi has more than 230 dealers in more than 100 major cities and regions throughout the country.

Audi will begin production at a second FAW-VW site in the southern Chinese city of Foshan in the southern province of Guangdong, in 2013. This plant will eventually push Audi’s total Chinese capacity above 700,000 vehicles a year.

The Foshan plant will have a capacity to build about 150,000 to 200,000 cars from 2013, while Changchun’s capacity will be raised to 550,000 cars. Foshan will employ about 4,000 workers and produce a “new member” of the A3 compact line.

Ckd assembly in India

Audi has been assembling cars for the local Indian market in Aurangabad, Maharashtra State, since 2007. The A4, A6 and Q5 are currently assembled at the Skoda Auto India Private Limited (SAIPL) plant, and were joined by Q7 at the end of 2012. In addition, Audi A8, A7 Sportback, RS5 and R8 are imported to India. In 2012, Audi almost doubled its sales to more than 9,000 cars, up from 5,511 in 2011.

The Audi Q7 will be produced at a rate of 1,000 units a year in a newly constructed hall at SAIPL, with production of the Audi Q3 also planned from mid-2013. The new hall covers a floor area of 20,000m2.

Audi is steadily building up its nationwide presence in India. There were 25 dealerships throughout the country at the end of 2012. New showrooms opened in Kanpur, Goa, Navi Mumbai, Coimbatore, Delhi West, Nagpur and Bhopal over the past few months.

The small-scale production operations for the Audi R8 supercar at Neckarsulm serve as the model for the CKD production line in Aurangabad. Individual parts are transferred by rail to the sea ports Hamburg and Bremerhaven and are shipped to Mumbai – covering about 11,000km in 28 days. Finally they are trucked the 480km from Mumbai to Aurangabad.

The Audi A6 is assembled from 2,500 parts in five working cycles each lasting 90 minutes. Production takes place in two shifts on two separate assembly lines. The painted bodies, engines and preassembled parts such as the front seats are all shipped from Germany. The parts preassembled at the Indian plant include the cockpit, front end, doors, pedals, rear axle and centre console.

'Local production of the Audi Q7 is part of our long-term growth strategy in India, one of the most promising auto markets in the world,' said Dr Frank Dreves, Audi board member for production. 'The very good infrastructure in the plant, efficient working processes, a qualified workforce and a well developed logistics environment, along with the surging growth of the Indian market, were the factors that motivated us to expand the Aurangabad plant.'

Planned manufacturing in the americas

Audi last year announced plans to build a €0.98bn (US$1.3bn) plant in the Mexican state of Puebla, its first production facility in the Americas. Construction will start in 2013, and the plant, which will start operations in 2016, will produce 150,000 units annually of the next-generation Audi Q5 SUV, to be supplied worldwide. The Mexico plant will replace Ingolstadt as the global source point for Q5, freeing up capacity in Germany for other models. The Mexico plant will also supply CKD kits for the Q5 to Changchun in China.

The plant, in the city of San Jose Chiapa, is expected to create around 10,000 jobs once it starts operating. It marks 'a milestone in Audi's growth strategy,' said Audi Mexico director, Walter Hanek, adding that it would be 'the most modern in Audi's production network in terms of efficiency of resources and manufacturing process'.

Audi is also said to be eyeing the Brazilian luxury car market, which is forecast to expand from 50,000 units in 2012 to up to 130,000 a year by 2016. Audi previously produced the two-generations-back A3 at the Volkswagen plant in Parana. This plant has now stopped producing the VW Fox hatchback for Europe, and this capacity could be used for Audi production, according to local sources.