How Audi Plans To Beat BMW

How Audi Plans To Beat BMW

Audi will kick off one of the most aggressive two-year model expansions in the luxury-car industry at the Detroit motor show as the German marque closes in on BMW, which sold a record of more than two million cars last year.

After probably narrowing No. 1 BMW AG’s lead further last year, Audi will target buyers of big cars in Detroit with a revamped version of the Q7 sport-utility vehicle. Still to come later this year is Audi’s first electric sports car for aficionados of technology and speed.

“The most impressive launch schedule in the coming two years will most likely be at Audi,” Jochen Gehrke, a Frankfurt- based analyst for Deutsche Bank, said in a note. Audi plans to spend 24 billion euros on technology and production in the next five years, with most of the money going to expand its lineup to 60 cars from 50. Audi’s goal is to wrest the No. 1 spot in the luxury-car market away from BMW by 2020, in a three-way race that also includes Mercedes-Benz, which has declared the same ambition.

Including Mini and Rolls-Royce vehicles, BMW delivered a record 2.12 million cars last year, a gain of 7.9%. Growth was paced by a 9.5% gain at the namesake brand to 1.81 million cars. Audi and Mercedes will report 2014 sales figures later today.

It’s been good times all around for luxury brands. Porsche and Bentley, which are units of Volkswagen AG like Audi, saw sales hit all-time highs last year. BMW unit Rolls-Royce also posted a record.

Audi’s push might not be enough to unseat BMW, which expanded with the X4 SUV coupe this year. The Munich-based company’s namesake brand will probably sell 2.22 million cars in 2020 compared with 2.1 million for Audi and 1.95 million for Daimler AG luxury unit Mercedes, according to estimates by IHS Automotive.

“The second-generation Q7 is of course a hugely important model in terms of Audi’s SUV strategy –- with the model competing head-to-head with BMW’s X5 and Mercedes-Benz’s M- Class,” said Tim Urquhart, a London-based analyst at IHS Automotive. “The new car looks much more honed.”

The car will be as much as 325 kilograms lighter than the current model, cutting fuel consumption by about a quarter. The interior offers more space, with the option of adding two foldable child seats in a third row to accommodate as many as seven passengers.

Buyers can also add a 10.1-inch tablet computer to entertain back-seat passengers. It connects automatically to the car’s infotainment system, which offers high-speed LTE Internet access. And a plug-in hybrid version of the car is on its way shortly after the Q7 goes on sale in the second quarter.

To safeguard its cachet as a maker of sporty cars even as it expands its range of SUVs, Audi revived development of a battery-powered sports car last year. The German company needs to catch up after newcomer Tesla Motors Inc. conquered the luxury electric-car market with its Model S and BMW rolled out the i8 plug-in hybrid sports car last year. That triggered concerns at parent VW that Audi’s global expansion could run out of steam.Audi’s answer, set for unveiling later this year, was part of an overhaul of its R8 two-seater coupe and roadster. The electric R8 will feature new battery technology.

The car’s range will be “significantly more than double” the prototype’s 215 kilometres, Markus Enzinger, Audi’s head of electric drivetrain development, said in the company’s internal magazine Dialoge. This could surpass the 426-kilometre range of Tesla’s Model S.

The image boost from the R8 could add cachet to the fresh version of the mid-size A4 sedan that’s also on its way. It’s due for introduction at the Frankfurt auto show in September and will probably contribute to sales next year.

Next week’s Q7 debut in Detroit underscores Audi’s push to win over customers in the US, where it trails both BMW and Mercedes. In November, it unveiled the Prologue concept car in Los Angeles to showcase a more aggressive design. It’s also developing an electric crossover for the US to challenge Tesla in 2017. “We’re setting our sights on the 200,000 mark” in the US, Audi Chief Executive Officer Rupert Stadler said in an interview in November. The company sold 182,011 vehicles in the US last year. “Once we’ve reached that we’ll look at the 300,000 mark,” Stadler said.

Audi’s new SUV will compete for attention at the Detroit show, formally called the North American International Auto Show, with dozens of new cars from luxury and mainstream brands. Among this year’s highlights will be revamps of the Toyota Tacoma mid-size pickup, Nissan Titan full-size truck and the Chevrolet Volt plug-in hybrid. Mercedes will show a plug-in version of its popular C-Class as Hyundai will do with its Sonata sedan.