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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.