Audi Cues the Q’s
In the sports utility vehicle (SUV) and “crossover” utility vehicle market Audi continues to suffer through a large gap in its model lineup. With sister company Volkswagen rolling out its own Touareg ahead of Audi and distant cousin Porsche firmly in the race with the Cayenne model, Audi is significantly behind most competitors including BMW (X5), Volvo (XC90) and offerings from Lexus and Infinity. Even Volvo’s XC90, which at the time was considered a late arrival to the category, has proven to be invaluable to Volvo’s ongoing viability. This is because while the XC90 has been the Volvo’s best-selling vehicle in the US throughout 2004, Volvo continues to see its sales of all other models (the recently overhauled S40 sedan being the lone exception) falling. The XC90 is the sole reason that Volvo has posted a net increase in sales so far this year in the United States – in fact it could be a record setting year based on Volvo’s already-reported best first half results ever. Over at Porsche the Cayenne sells 13,000+ units per year and helps give it a tremendous foundation for its “world’s most profitable auto manufacturer” title. BMW, meanwhile, sees much the same trend as Volvo with decreasing passenger car deliveries and booming demand for its X5 and the smaller X3. Through October 2004 BMW sold an incredible 55,173 units in the US, compared with around 32,000 sales for the same period in 2003 (although the X3 was not available in 2003). BMW even manufactures the X5 in its Spartanburg, South Carolina plant. By way of comparison, Audi sold around 86,000 total vehicles in the US in 2003. Even making the assumption that its eventual SUV product will be capable and competitive, one would expect that Audi’s initial annual SUV sales will be far short of VW’s Touareg at 30,000+ and BMW’s X5/X3 at 60,000+ (Audi’s SUV will cost more than the Touareg and be introduced so much later than the established X5/X3 lines). For the sake of argument let’s assume that Audi can find 10,000 sales that would have gone elsewhere (this figure is reasonable, at least in the first full year of sales). Add an entra 10,000 sales to its 2003 results and Audi reports a tidy 11.6% year-over-year sales increase. This would go a long ways towards helping Audi exceed 100,000 annual units sold in the United States, a feat it has never accomplished. Based on the data presented above we also know that it would be possible for Audi’s SUV offering to actually eat into the sales of its passenger vehicles, but the same data suggests that SUV sales have much stronger growth prospects than passenger vehicles do anyway. Audi, with no current offering, stands to lose ground until things are rectified. Cue the Q’s As recently announced in Paris, help is on the way for Audi. We won’t know for some time whether it is too little, too late since the first Audi SUV – the so called Q7 – is not scheduled to make its public debut until the Frankfurt Motor Show in September 2005. Yes, that means over nine months from today until we see it for the first time and then a full year until it finally goes on sale (presumably in Europe first, with North American sales to follow in March 2006). The Q7, which is based on the Touareg platform, will initially be available with Audi’s 4.2-liter V8 in North America or that same engine plus a V6 engine variant (most likely the 3.0-liter diesel) in Europe. After that it’s still anybody’s guess, however a new 3.4-liter gas V6 is said to be in the works and the 5.0-liter V10 diesel found in both the VW Touareg and Phaeton seems realistic. Keep in mind, however, that Audi of America officials recently denied any possibility of offering a diesel in the North American lineup in the next two years, citing Audi’s inability to meet demand for diesel powerplants in Europe. Diligent pestering of Audi regarding a rumored S7 SUV variant has been fruitless. Audi is certainly near the top of the list of any car company which could both build a performance SUV to rival the Cayenne and have success selling it (think RS 6 SUV). The supposed engine for the S7? What else but a detuned version of the 5.0-litre V10 engine normally fitted to sister company Lamborghini’s Gallardo. The Q7 is expected to be standard SUV fare with seating for six arranged in three rows of two, as well as the ability to fold down the rear seating area to accomodate additional storage requirements. Audi will undoubtedly include it’s MMI infotainment system and other recent technological advancements such as adaptive lighting. A smaller crossover utility vehicle has also been acknowledged by Audi. Said to be called the Q5, it would be based on the A4 platform and offer a sportier, more compact option than the Q7. This is, of course, very similar to BMW’s X5 / X3 offering, yet at least two years behind. The Q5 is thought to be in the works for a 2007 launch. Conclusion We will be tracking Audi’s relative success (or lack thereof) in the SUV market for some time to come. With a sizeable gap to close, Audi needs the inital Q7 offering to leapfrog current model offerings from key competitors and actually start eating market share if it expects to cash in on the current SUV trends. Audi is positioned over the next two years to have one of, if not the, youngest model lineups in the near-luxury/luxury marketplace so it may just find itself well-positioned to challenge. Cue the Q’s and the finicky SUV marketplace will no doubt settle all questions regarding Audi’s timing. |