Audi to spend $17 billion to fight BMW

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Thread: Audi to spend $17 billion to fight BMW

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    Audi to spend $17 billion to fight BMW

    By Michael Harley
    Posted Dec 29th 2012 5:30PM

    It's no secret that VW Group, parent company to not only Volkswagen but also Audi, Bugatti, Bentley, Lamborghini, Porsche and Ducati brands sold in the US, is determined to become the world's largest automaker. Even more impressive is that VW is prepared to spend billions to make it happen.

    With that comes word that VW Group will be spending $17 billion on its Audi brand over the next three years to push itself above rival BMW. The money will be invested in both vehicle development (including lightweight auto design and alternative powertrains) and facilities (including expansion in Hungary, China and new operations in Mexico). The luxury brand is focused on global manufacturing infrastructure.

    Already Europe's best-selling luxury brand, Audi's objective is to overtake BMW by the end of the decade by selling more than two million cars per year (BMW is shooting for 1.54 million sales in 2013). If those objectives are met, VW Group should be on track to be the industry's volume leader by 2018.

    http://www.autoblog.com/2012/12/29/a...-to-fight-bmw/

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    Re: Audi to spend $17 billion to fight BMW

    Exclusivity and rarity used to be part of the allure of owning a premium car. These cars are and will be as common as Corollas.

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    Re: Audi to spend $17 billion to fight BMW

    Thats alot of money, but it seems as if they are going for quantity as their main focus. I'm not saying Audi's are low quality by any means, but what I am saying is I think we will see less R8-type vehicles and more A6-type vehicles. Essentially appealing to selling more sedans for money and not building the exclusive flash of today, as well put above me. I think this is a bad approach because it is ignorant to all but one aspect of production; quantity. We shall see, though.
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    Re: Audi to spend $17 billion to fight BMW

    Like Mr Burns said luxury manufacturers should never be chasing quantity, they are supposed to be about exclusivity and being an aspirational vehicle that not everyone can afford and aren't 1 in 4 cars seen on the road. I also don't believe in creating all these sub segments for vehicles such as the X6/A7 just for the sake of increasing sales.

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    Re: Audi to spend $17 billion to fight BMW

    They must be really overcharging customers if they can afford 17 billion dollars in three years time.

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    Re: Audi to spend $17 billion to fight BMW

    Quote Originally Posted by Mr. Burns View Post
    Exclusivity and rarity used to be part of the allure of owning a premium car. These cars are and will be as common as Corollas.
    Volts impress me more than Audi/BMW/MB. They're all way too common.

    Quote Originally Posted by JBsZ06 View Post
    They must be really overcharging customers if they can afford 17 billion dollars in three years time.
    I wouldn't be surprised if it were an overinflated number that was counting already planned expenditure. I don't think many companies could afford that kind of injection of cash.

    The worst part about all this is that it reminds me just how lowly Cadillac really is. What are their global sales, 200,000? Sheesh. What'll it be in 5 or 6 years? 500k? It's a long road to victory, and while I hope they don't go for volume at the expense of quality, I feel like GM is at such a huge disadvantage without them.

    Imagine if Cadillac sold on the levels of Audi and BMW: GM would be #1 globally with the profits to match.

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    Re: Audi to spend $17 billion to fight BMW

    17 billions... it seems Audi has some serious plans in future.
    What are they selling number now...1.3 , 1.4 millions..and they want to sell 2 millions annually by 2020.
    For car manufacturer that sells overpriced inferior product it seems this company is doing very well.

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    Re: Audi to spend $17 billion to fight BMW

    Quote Originally Posted by sfbreh View Post
    The worst part about all this is that it reminds me just how lowly Cadillac really is. What are their global sales, 200,000? Sheesh. What'll it be in 5 or 6 years? 500k? It's a long road to victory, and while I hope they don't go for volume at the expense of quality, I feel like GM is at such a huge disadvantage without them.

    Imagine if Cadillac sold on the levels of Audi and BMW: GM would be #1 globally with the profits to match.
    Just 200000 globally..that sounds very low.
    Volume at the expense of quality..well competition sells 6,7 times more cars and still have very good quality.
    Well before we imagine Cadillac having sales of Audi, BMW etc.. we must imagine Cadillac lineup. It would probably take similar lineup like the one from BMW or Audi.And that means model smaller than ATS (i actually wouldn't mind that), more SUV (for every segment....the horror), big luxury sedan (on its way), line of big 4 door coupes (none). Much bigger offerings of engines (smaller engines for European market ), diesel engine, maybe something to serve as halo car...and much better image worldwide.
    Last edited by asrapid1; 12-30-2012 at 05:24 AM.

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    Re: Audi to spend $17 billion to fight BMW

    Quote Originally Posted by nruggiero View Post
    By Michael Harley
    Posted Dec 29th 2012 5:30PM

    It's no secret that VW Group, parent company to not only Volkswagen but also Audi, Bugatti, Bentley, Lamborghini, Porsche and Ducati brands sold in the US, is determined to become the world's largest automaker.
    VAG is already the world's largest CAR maker - GM and Toyota only beat it by including Light Commercial Vehicles and in Toyota's case, Heavy Commercial Vehicles.

    http://en.wikipedia.org/wiki/Automotive_industry

    In car numbers, VAG were well ahead in 2011 with GM and Toyota scrapping over 2nd/3rd - but creeping up on the blind side is Hyundai-Kia already making about double the number that Ford-Lincoln-Mercury do.

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    Re: Audi to spend $17 billion to fight BMW

    Quote Originally Posted by majicbz07 View Post
    Like Mr Burns said luxury manufacturers should never be chasing quantity, they are supposed to be about exclusivity and being an aspirational vehicle that not everyone can afford and aren't 1 in 4 cars seen on the road.
    VAG have Bentley for that role.

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    Re: Audi to spend $17 billion to fight BMW

    I suspect a large portion of that money will go into powertrains to meet <95 gCO2/km fleet average by 1Q2020 in the EU. That is a fleet average fuel economy of ≈58 and 68 mpg(US) combined for gasoline and diesel respectively on the NEDC test cycle.

    The penalty for noncompliance is about $130/gCO2 over limit multiplied by the number of vehicles sold. That could get expensive very quickly.

    Of course money will go into weight and coefficient of drag reductions as well as materials/production system/facility/process efficiency upgrades.

    A serious commitment to their future market position.

    And, of course ... NONE of this will trickle down to VW ... ya think?

    Note that as of today 12/30/12 Audi does NOT even have one vehicle in the market that meet even the 4Q2014 Euro Step VI emissions requirements. Same is true for VW.
    Last edited by 44 mpg by 2010; 12-30-2012 at 12:53 PM.
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    Re: Audi to spend $17 billion to fight BMW

    Quote Originally Posted by 44 mpg by 2010 View Post

    Note that as of today 12/30/12 Audi does NOT even have one vehicle in the market that meet even the 4Q2014 Euro Step VI emissions requirements. Same is true for VW.
    Nor would you expect them to !

    There's no change between Euro 5 (4Q2009) and Euro 6 (4Q2014) for gasoline engines so by implication these already meet the next raft of regulations. For diesels the change for Euro 6 is effectively limited to reducing NOx by just over half.

    Few European diesel models, if any, will meet the European model year 2015 (4Q2014) Euro emission regulations before the European model year 2014, ie 4Q2013 - so plenty of time yet !
    Last edited by Ruperts Trooper; 12-30-2012 at 03:14 PM.

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    Re: Audi to spend $17 billion to fight BMW

    There are a couple things here....

    1) $17 billion is an incredible amount of money to be spent to get to 2M sales -- even over the course of 7 more years. That's about $2.4B per year on Audi ALONE.

    2) Where will Audi be gaining the sales volume from? A1, A2, A3? or A6, A7, and A8? The reason being, if it's from A1-3, then it's a "race to the bottom." This does absolutely nothing to solidify Audi's prestige image. If anything, it makes it cloudy. In contrast, Mercedes has far more cars on the "prestige" end of the spectrum than Audi, and it still sell a considerable amount.

    3) This also doesn't take into account new cars due from BMW and Mercedes, that will more than likely disrupt Audi at the low end.


    Ultimately, I think Mercedes and BMW are well positioned to weather the challenge from Audi.

    It's the rest of the luxury competitors that will suffer: Lexus, Infiniti, JLR, Cadillac.

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    Re: Audi to spend $17 billion to fight BMW

    Quote Originally Posted by sfbreh View Post
    The worst part about all this is that it reminds me just how lowly Cadillac really is. What are their global sales, 200,000? Sheesh. What'll it be in 5 or 6 years? 500k? It's a long road to victory, and while I hope they don't go for volume at the expense of quality, I feel like GM is at such a huge disadvantage without them.

    Imagine if Cadillac sold on the levels of Audi and BMW: GM would be #1 globally with the profits to match.
    Cadillac is a VERY VERY small fish in a VERY VERY big pond.
    Cadillac will probably end up at 148,000 in sales in the US in 2012. Factor in 15-20,000 for international sales (I think that's generous), so you have about 170,000 in sales globally.

    To put it into perspective, JLR annual global sales are about 2x that of Cadillac.

    I think Cadillac wanted sales at 250,000, but that was the Lutz era. I'm not sure what they're pegging at now.


    Victory for Cadillac should not be measured in sales, but in the level of prestige and image rebuilt for the brand. When that is restored, sales will come. It's essentially mirroring what JLR is doing with Jaguar.


    Cadillac can never get to Audi/Mercedes/BMW levels because GM kept Buick alive. The "luxury low end" doesn't slot at Cadillac anywhere, so it goes to Buick. Verano, Encore, and Regal would fit perfectly at Cadillac otherwise. You'd shift the purpose of the XTS into a Lexus ES competitor.

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    Re: Audi to spend $17 billion to fight BMW

    Once Buick completes it's ascension to entry luxury GM will actually be one of if not the largest purveyors of luxury automobiles on the planet.
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