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From YourSITE.com Miscellaneous Features Fourtitude: With the A5, R8, TT, they are definitely different priorities than we have seen in the past from Audi.
Fourtitude: Over the next few years, where do most of the sales come from then? Your rainmaker is the A4, then also maybe the Q5 and the A6? Hoffmann: We would never talk about the complete detailed figures of what we want to achieve. That has to do with legal issues being a listed company. You don't want to give too much away to your competitors. Obviously, what we want to do in the US, and I think we have the basis for it, is be a strong player in the crossover sector, the SUV sector, be a strong player in the sedan segment… especially in the B and C segment. What you will see in the future is probably a little more concentration on the A6 and making that an even more successful car. It outsold, on a worldwide basis, the E-class and the 5-series in 2006. So, the question is, why don't we achieve that here? We ask this question to ourselves all the time. Obviously, pricing is an issue and so on. It is also an awareness issue. We are going to work on that. We work now on the packaging structure. We work on the appearance. The new model year will look completely revamped. We will do something very nice for the model year. We will make the car look much sportier. I think that is also really important to focus on, because the C segment… what we call it,.. the A6, is really important for your overall image. These are the opinion leaders. These are the people, the drivers, the shapers, the makers in a society. People look at them. What is he driving? It is really important for us to be there and have a much better share. I would be pleased if my ratio to the competition on the A6 was much closer to where it is on the A4, where we are much, much stronger. That has to be the goal. We have to increase our market share in the segment and we have the car and the performance. We are going to introduce nice performance engines here in the U. S. and I think we have a good package to compete against our European friends and give them a run for their money. I think that is the direction where Audi has to go, because that then opens up the opportunity to draw more people in from the smaller segments. Also, I believe eventually Audi will need something in the A segment that feeds more and more customers and conquers more customers, bringing them into the luxury market, and then we have a chance to move many of them into our lineup, into the B and then maybe the C, into a cabriolet, maybe a coupe. We have so many options for these people. Once you are in an Audi, you don't have to leave if your tastes changes or your lifestyles changes. We don't have to pass these people on to one of competitors because now we have a coupe for example. So you don’t lose these people anymore that thought, “Hey I am at an age. The kids are out of the house. I am self-employed. I just need a two-seater.” We now have something for them. I think that is the basis, that you fill the gaps and you drive a stream of people into the brand and you give them Q5, you can put them in a TT. We have such a nice product portfolio that you can fill all the wishes and keep them in the brand. Fourtitude: Going back to the A segment offering… are you referring to the A3? Hoffmann: Yeah, in that segment and size there is a lot of potential for young people that aspire to premium cars but, at the moment, the entry level or the hurdle is a little high right now. I can see where various body styles could be attractive down there, or even as a second car. It leaves a lot of opportunities, because premium for me has nothing to do with size. In Germany, you have a lot of very rich people driving the A3 in 3-door and 5-door versions. It is not a question purely of size. You have to offer a luxury car in each segment. But just by the nature of the segment, the A segment is the segment that feeds most of the B and C segments at a later stage, because people want to grow and get into other cars. Fourtitude: Jumping around again, your diesel strategy starting with 3.0 TDI can easily proliferate from anything longitudinal that you make. Do you then consider diesel for A3? I know that engine will not fit A3. Hoffmann: That would probably be a step too far. We have clear diesel strategy. We have commitment and I think it is important that we do diesel here in the United States. It is one of the Audi strongholds. We are the diesel leaders in Europe, and we are the most advanced with respect to performance and emissions. We started the whole diesel success story in Europe when we introduced the TDIs, the turbo direct injections, and when we then went to the Piezo injectors, got the diesel cleaner and cleaner and got the performance up and up. I think, for the US, this is a perfect combination. I believe that Americans buy horsepower, but they drive torque and the diesels are the perfect solution for that. With the low-end torque, you are pressed into your seat. The acceleration off the line is tremendous, and when you go to the filling station it puts a smile on your face. Shouldn't I have been refilling last week? Oh, I still have fuel in my tank. With the fuel economy, that is how I see it. You have the performance of an 8-cylinder, but you have the fuel economy of a 6-cylinder or even better gas engine. That is the nice thing. You drive an 8-cylinder but you actually drive a 6-cylinder, and you fill almost like a 4 cylinder. That is a fantastic combination. We also decided to go for clean diesel only… all 50 states. We don't want to do an intermediate scenario. We will launch clean diesel at the end of 2008, 50 states and these strong emission requirements make the choice for the customer really easy - peace of mind to know that this engine is as clean as any gasoline engine on the market, as clean as any engine can get. So you are not polluting anything and you save 20-25% on fuel. Greenhouse gases are much, much lower so your CO2 emissions are much lower. It has to be a success story for the United States. We want to do that in the Q7. It is the most logical car because (fuel economy) is something of concern for customers with SUVs. We will see how the acceptance is and then how the rollout is. You are right, with the strategy of focusing on the 3.0 liter TDI, we have a lot of options open and then if the market shifted open to the direction where I predict it to be, then yes I could envision one in the A3. Look at the Volkswagen Jetta. It is doing very well and not just here in the US, but also in Canada. In Canada, 75% of their Jetta sales are diesel. I strongly believe that we have to do it top-down, get it right as a performance car. Obviously, we are the only ones who race diesel and win with diesels in the R10. Get that in the head of the customer that a diesel is clean, a lot of performance, not noisy and then I think we have all the options to roll it out as the demand grows. Fourtitude: You mentioned racing, the R10. From a product planning standpoint, do you then consider maybe packaging the diesel in a sporty way… S line maybe. For instance A4 S-line it could fit. Is that something that you consider? Hoffmann: At the moment, we are in the process of defining the package for the car. I wouldn't go that far, to put S-line standard on the diesel, but of course it will also be available. I also think that the luxury buyer also demands a lot of luxury items. We try to package the diesel really nicely in a premium way. We want to keep proliferation low as well, so I think there will already be a really well-equipped diesel with a lot of equipment, with a lot of convenience features. That is how I want to start there and make it easy for the customer - not too complex. Especially when I want to draw the new to the diesels, I would like to have a lot of standard equipment already there, that the car is equipped like or Q7 Premium for example. Fourtitude: Might the diesel then be similarily considered at launch? I know the A5 will be quattro only. Do you consider quattro only on diesel, though front-wheel drive might be a little bit more fuel-efficient? Hoffmann: Our diesels have a lot of torque. We are talking about 370 lb/ft of torque. That is a lot that you have to put on the street. The logical solution is obviously quattro. The Q7 only comes with quattro, so that is where we start. At the end of the day, we will see if there is room for smaller diesel engines and then, yes, you could envision front-wheel drives, but at the moment I think we have to keep complexity as low as possible and be really clear in our positioning that the diesel is clean, is fuel efficient and offers a lot of performance. Therefore the combination with quattro is just perfect. Fourtitude: The reason I asked.. I spent a week in a 2.T MultiTronic A4 and I think 37 indicated mpg on the highway. Hoffmann: I think eventually where the American market is going is more towards where the European market is today, where 50% of the cars are diesels. If you go into the Audi product range, if you go into Italy you have 90% diesels, the U.K. 75% diesels. Then, of course, it is a completely different ballgame. Then you might see variations like that. That is the nice thing. You see fuel economy figures like the A3. You can get 45 mpg in Germany with a diesel easily. That is really nice. You don't have to shift as often as with other cars. You cruise at 2000 RPM, you put down the foot and there is power, there is torque available. The car just pulls away. You don't lose energy by shifting. We have to do the first steps first. That is, introduce it and change the perception of the American customer. I think we have the knowledge, the technology and the right people in Germany. We are the diesel leader over there. I think it is really easy for us to react quickly. That is an advantage obviously, out of that strength, to build a business here in the U.S. that is a luxury. That makes me feel really good. That makes me comfortable to look down the road in 4-5 years time.
Fourtitude: Jumping to the other side of your portfolio. Some photos turned up his past week of the RS 6 at Nurburing. I would imagine that Audi is well aware that many spy photographers live there daily. Is the RS 6 something to consider for the U.S.? Hoffmann: Not at the moment. Actually I haven't seen the spy shots yet because I haven't seen anything confirmed about the RS6 yet. What we are doing with the R S4 here, I think we did a good job, we launched it and established the RS brand a little bit. The last time we had an RS here with the RS 6, it was a car with limited volume, limited visibility. I think we did the right thing with the R S4. I am looking into the option of maybe bringing another body style of the R S4 to the United States. Then you also have to consider it from a technology point of view. It is a little bit difficult to make these cars fit to the U.S. market, crash requirements, and so forth. It gets tight in the engine compartments, so it is not that easy. At the moment, I am focusing more on the RS 4 so nothing has been decided on the RS 6 yet. Fourtitude: When you say RS 4 you are referring to B7? Hoffmann: Yes. Editor’s Note: We went no further in this line of questioning, because our time with Wolfgang was limited. We very reasonably assume that he is referring to the RS 4 Cabriolet, as the US market is more open to convertibles and the Cabriolet’s production at the Karmann Coachworks in Osnabruck, Germany will continue even after the B7 line in Ingolstadt is entirely re-tooled for B8. Based on previous conversations with Audi of America’s Johan de Nysschen, we’re guessing the RS 4 Cabriolet will hit the market in the summer of 2008, following the disappearance of the RS 4 sedan. Fourtitude: Does the new modular longitudinal platform make things easier for you all in consideration for what you certify, what you don't, what can be brought into this market? Are there any sort of savings given the additional shared componentry? Does that make life any easier for you as you consider different drivetrains or body styles for this market? Hoffmann: That is a good question. First of all, it gives more flexibility in Ingolstadt to create more derivatives on any type of segment if it’s now A4, A5, A6, or A8. This flexibility has now increased. You still have the hurdles if you bring the car to the US with respect to crash requirements and of course with respect to emissions. I am not really sure if it makes life that much simpler in that aspect. There are still the same hurdles. They are still the same if you have an A4, A4 cabriolet and so on. You still have the crash requirement, you still have to prove that the car complies to all of that even if you use some of the same components. That does not mean that you don't have to go through all of the steps, but it will help if you have more engines that you can share across the board. Then, the application costs per engine, per variant come down because you know the engine already and the variable is then usually the weight of the car, the drag coefficient. That makes it a little bit easier on that side. I think generally in Ingolstadt it increases the flexibility to have more derivatives and then increases the chance for us to get one, because if they get the costs down per derivative, my chances to offer one of them on the U.S. side increase on the US. The other nice thing is that it opens up the door for me to say “What about a derivative on that car, which was impossible to think about in the past but now could be considered because the costs in Ingolstadt came down. Fourtitude: Speaking of derivatives, one thing we haven't seen back in this country is the allroad, which you mentioned earlier. If you are not seeing allroad customers coming in for a Q7, do you then see them coming in for a Q5 because it is car based or is there a consideration for Allroad again in the U.S.? Hoffmann: I think the allroad is always on the table. People were real enthusiasts, really Audi guys and women. They really loved the car. I love it personally. I have had two or three personally. It is just another question of crash requirement, because ride height is different and so on. It simply wasn't possible to bring it back to the US in this generation's A6. It was just too expensive to modify. Then I would have had to charge a price that would have had no chance of finding acceptance with an American customer. Yes, of course we always look into it and we are always thinking about it because I think it is a nice body style. It is really accepted in Europe and maybe we will look into that for future generations - maybe A6, maybe A4. It hasn't been decided yet, but it is always on the table. We try and we fight to get it back and I would like to see an allroad back in the United States. Fourtitude: I noticed a small detail with the allroad. The old allroad was simply the allroad. The new allroad in Europe is the A6 allroad. You mentioned maybe A4 allroad. Is the allroad something more of a brand now instead of a model? Is that something you could span across a range? Hoffmann: You could imagine an Allroad in not just in an A6, but also in an A4. As I said, we are just spinning the ideas. Nothing has been decided. You also see in Europe that the nomenclature on the car is “allroad”. It is still “allroad”. I think that is the important thing. Even if we were to have 2 allroads, it would still be an allroad. It would just have a little change in size, but the DNA is just a smaller version. allroad stands for the whole differentiation of the car, more than for the size of the car. It stands for the lifestyle. It stands for what the car expresses. Therefore, I think they made a good decision back in Germany just to call it allroad on the car and then it is clear what it is.
Fourtitude: Jumping subjects again, I understand the S5 will hit the U.S. market ahead of the A5? Hoffmann: Yes, the S5 will be the launch car. We launch it as a 6-speed manual in late fall. It is very sharp, with precision, really showing that the coupe is all about performance. In a couple of months, we are going to see the 3.2 and then another couple of months later we are going to see the Tiptronic versions of these engines. We roll it out in a top-down fashion, but by May or June next year we will have a complete lineup. Fourtitude: So we will get the Tiptronic not the DSG? Hoffmann: On this car you will see the Tiptronic. Fourtitude: What were the reasonings behind launching the S5 first? In the past, Audi has always done the “A” car and then the “S” car. Was it a definite push to emphasize the performance and sport? Hoffmann: Here we had the luxury that there was no predecessor. If you have that unique situation, where you enter a new segment or a segment in which we haven't been for many, many years. You can really then shape the perception of that car and I think that is why we went for performance first, with the “S” first. It was also to give the “S” a longer life cycle. All of our customers always ask why (the S-car) comes so late in the life cycle. In the past, it was a life cycle measure. Stabilize your volume stream and so on. But, here we are using it as a clear positioning element right from the start to show that this is a no-kidding car. This car is all about performance, proportions, design, low-stance, wider track. I think that is the right thing to do - keep demand high and supply a little bit low. Let's build up some attention for that car, have a lot of enthusiasts talk about it. It also gives you good coverage with an “S” model because it is so exciting and the performance is so great. We need the buzz. Sometimes people say that Audi is the best-kept secret. We have to get out of the shadow now. We have to get our shoulders back and show people what we are and what we have. I think that is also one card we have to play. We draw it and we play that card. Fourtitude: You have a car from the RS line now. Is that something you put later, sort of where the S-version was in production, a little later down the line? I mean, here we are about 1 or 2 years left on the B7 at the point, where the RS 4 hits the market. Hoffmann: I think ideally we would like to see our RS-model a little bit earlier, but we haven't decided yet completely for the next generation of all of our cars. Of course, for me, it is an important element to have RS models to energize the brand, to show what Audi can do on a technology base. We are looking into that all the time, but of course our RS models will always be the pinnacle of the brand. I can't envision the life cycle of 6-7 years without RS models. It is just not possible. They are good for one to three years, because the market is not that big. Then you have gotten all of your customers. I think you have to be careful not to treat it like a completely normal car. It should always be treated like a special car. Showing it a little bit early, I could see that in the future. Fourtitude: Turbos have always been a big part of Audi's heritage - today, pretty much relegated to the 2.0T. You see BMW with a turbo mid-range, similar to offerings you have had in the past. Do turbos fit on the top end now, or is that more of something left to other technologies like FSI, valvelift, etc. Hoffmann: We haven't announced anything about that. But to answer shortly, yes. I think you will see something really exciting in the future with a turbo. Definitely. Fourtitude: Will it be in the realistic realm, perhaps the B5 S4 or in the exotic realm like what the RS6 was in the past? Hoffmann: It will be in a more of a high volume segment. You will see something nice in the near future. That is all I can say at the moment.
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