Is Audi sacrificing brand equity for volumes?

audi-nanuk3_1024-940x628The shape of the car market has changed completely in the last decade. It used to have a bulging middle, stuffed with the mainstream makes, and with premium and value brands occupying the poles.

Now it resembles an egg timer. The middle has been squeezed to within an inch of its life, by aspirational value brands from one direction and acquisitive premium brands from the other. Ford, Vauxhall/Opel, Peugeot, Renault, Honda and Toyota have had their market share ripped apart by Skoda, Kia and Hyundai, and BMW, Mercedes and Audi.

No brand comes close to Audi in shaping this new landscape. The company has embarked on an explosive product diversification programme, offering everything from a supermini to a supercar, with around 50 key model variants including crossover versions of all its volume products. It plans to increase to 60 variants by 2015, partly by entering some of the few segments it’s not already in, with Q6 and Q8 crossovers, a version of VW’s Up! mini and even a people-carrier. Audi’s value to VW was evident at the recent Frankfurt motor show, where it was given its own hall, separate from the one accommodating the group’s seven other brands, where its segment-busting mentality and naked ambition were shown by an off-road supercar concept.

It’s not only the largest of the premium makes by volumes; it outsells Fiat and Citroen, and is within 0.5% of Peugeot and Renault. And now it’s become the UK’s fourth-largest seller, behind just Ford, Vauxhall and VW. The fact that it’s achieved this without a single model in the top 10 emphasises its incredible spread. CEO Rupert Stadler’s recent comment that Western Europe’s market won’t recover before the end of the decade must have felt like a stab in the eye to the beleaguered mainstream brands.

An extraordinary success then. But the future may not be quite as simple: it will be a challenge to maintain brand equity as a result of shifting into so new market segments and growing so fast. Yes, Audi benefits from the scale of VW Group, meaning that it can develop high-quality products economically and price them competitively, so it will continue to churn out very good cars at affordable prices.

But the company has built its business on being premium and aspirational. Its ubiquity means it’s no longer truly aspirational and, by definition, it’s not exclusive: while the exceptionally low interest rates of the last few years have helped grow sales they’ve also helped commoditise the the productsA few years ago owning an Audi meant independent thinking and cool Bauhaus understatement; now it means nothing in particular.  If a brand is present in every part of the market including all the mainstream segments, conquesting business from the mainstream brands, can it continue to perceived as premium?

It will be interesting to find out, and only the customer will decide.

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5 thoughts on “Is Audi sacrificing brand equity for volumes?

  1. Hi Mark (old school friend of yours here) – I owned two A4’s and a large part of my purchase thinking was that I was not going to get a BMW. The image I had conjured up (probably warped) was there was something a little “dirty” and “Wall Street broker” about owning a 330! I liked the lower key and, as you say, understated starkness of an Audi. The brand has recovered really well here in the US and I believe held in higher esteem than in the UK (thanks a bunch Clarkson!).
    I had to give the last A4 up when I feared a transmission failure on the CVT while moving my young(ish) family 1,300 miles up the West Coast to Seattle 2 years ago. Now with a greater need for AWD, I’ll probably scanning the latest, massively increasing choices from the 4 rings.
    Regards
    Mark Alexander

    1. Very belated thanks for your comments (and hi!) Mark. For some reason it showed up only recently. Hope you found a ring variant to suit you. Of not you must be very fussy or very brand-sensitive! Best wishes, Mark

      1. Hi Mark – Thanks for the reply. The other respondent, Janon, brings up very valid points about VW and Audi. Not that I’m THAT smart, but we’re a 2 x VW car family now. Living in the Pacific NorthWest, the Tiguan TSI 4Motion works really well up here.
        I respect the Audi’s understated design ethos more than the brand image itself; though I realize there is a connection. Personally I’m not much of a “brand sensitive” person (despite the fact I seem to be working for a company called BrandTruth; oh the irony! I really do prefer to fly under the radar.
        Hopefully you’ll get this reply before November…
        Mark A,

      2. Hi Mark – all restored now. I agree wholeheartedly about going under the radar. That’s what you used to be able to do with Audi, while being alternative to the norms of the mainstream brands or the premium benchmarks with (then) lower volumes. Not possible any more, and with it has come an aggressive edge to the Audi brand which doesn’t appeal to everyone. Time was when an architect or would choose and Audi. In the UK these days – according to Clarkson – all Audis are driven by estate agents. Not quite right, but my last car was an Audi, current car a VW. I’m still drawn to the A7 though.
        Keep flying low…
        Mark

  2. IMO the biggest problem with Audi is that VW has made it a suckers bet. It was sacrificed to fix the even bigger volume opportunity in VW. Read any head to head of a VW and Audi (even S and RS) and the VW often *wins*. Absolutely outrageous and, while great for VW buyers, makes Audi buyers a special brand of sucker. Can’t continue IMO. Toyota does a far better job protecting Lexus differentiation.

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