Scott Keogh L.A. Auto Show Press Conference Remarks

Los Angeles Auto Show
Audi Press Conference
November 20, 2013

Remarks by:

Scott Keogh
President – Audi of America, Inc.

Thank you.

I’d like to extend a special welcome to our AUDI AG colleagues: Prof. Dr. Ulrich Hackenberg, Member of the Board responsible for Technical Development, and Luca de Meo, Member of the Board responsible for Marketing and Sales.

Today we want to dive into something that’s far more important than a typical product launch. Indeed, today’s announcement really marks a new chapter for our brand.

Here in America, Audi has always had plenty of promise. But converting that promise into performance required one key ingredient: We needed to prove ourselves to the U.S. market and the U.S. consumer. Not proof with gimmicks, sales stunts, or discounts – but proof through a sustainable business model.

The results speak for themselves: November will be our 35th consecutive month of record sales. It once took us 40 years to reach 100,000 sales. We did it in just eight months this year. We expect to have another record year in 2013, as well, by selling more than 150,000 cars in the U.S.

These are the vital signs of a healthy business. These are the result of an unwavering plan based on four key steps:

We built a desirable brand.
We’re now the second most cross-shopped luxury brand, and our consideration levels have never been higher.

We built value with smart supply, strong residuals, and dealer network investment.
Today, Audi residual values are higher and our incentives are lower than our German competitors, and Audi dealers across the country are investing more than one billion dollars on facilities. And the blue sky value of an Audi franchise has soared to seven times earnings… among the highest in the industry.

A strong brand has strong pricing power.
Today our average transaction prices are $10,000 above where they were in 2009.
And we reinvented the Audi customer experience, while enhancing the Audi reputation for quality.
Just a few weeks ago, Consumer Reports ranked Audi in fourth place – and climbing – in its annual car reliability survey.

That was how we proved ourselves in and to the U.S. market. Now Audi is positioned to build off of this foundation.

And that brings me to the second thing we needed to convert promise into performance:
We needed a breakthrough compact sedan designed for American tastes from the start. One loaded with technology and refinements like quattro and leading-edge electronics that represent a true Audi.

Now, I’ve learned to be careful of what we ask for when it comes to Audi engineers. You ask for one sedan and look at what we get. Not one spectacular new car. Not one model with two engine options. No, we are here to launch an entire new family of cars. One made up of three body styles, five unique engines and seven variants.

The stunning all-new Audi A3 lineup we are introducing today shows Audi isn’t dipping a toe into what’s certain to become the hottest segment in the premium car business. We are diving in.

Between now and 2018, this once sleepy segment is expected to grow by a factor of four. This “A-segment” alone will account for 57% of the growth expected for the entire U.S. luxury market in the years ahead. Obviously that’s not territory for the timid or faint of heart. And that’s why Audi intends to go at this opportunity full force.

But who are the target buyers for the A3?

Many of you have written lengthy reports on how important it is for brands to connect with Gen Y – the Millennials. In response, some brands are reinventing themselves to appeal to these younger buyers, undergoing multi-million dollar makeovers.

Audi’s competitive advantage is that we don’t need to reinvent ourselves. For years, Audi has been outpacing our competition in appeal to both Gen X and Gen Y. And we know, as these generations replace Boomers in purchasing power, that appeal will be even more valuable. So while certain other luxury car brands are spending hundreds of millions on their makeovers, Audi is more comfortable in its skin than ever.

But to us, the appeal of the A3 isn’t based on the year of your birth – it’s based on a series of traits and characteristics we’re defining as “Generation Audi.”

What makes someone “Generation Audi?” A curiosity for technology… An appreciation for brilliant design… Smart decisions that tell the world you are sporty, you are sophisticated… You are progressive.

We’re confident that we’ve got the car for Generation Audi – whether they’re 55 and older (the people who make 40% of all new car purchases, by the way), or 25 and just getting started.

There is a theory out there that to get a compact luxury car to a particular price point you need to cut corners, scrap premium finishes, and skimp on technology. But the Audi way is to build cars to the highest possible standard, rather than the lowest common denominator. Allow me to introduce the first two members of the Audi A3 family.

We committed to the philosophy that smaller doesn’t have to equal sacrifice. That our customers would expect us to provide the same technology in the car that they get from their devices in every other facet of their lives.

We committed to a $29,900 starting price that actually includes leather seating, Xenon headlamps, and a panorama sunroof.

The A3 comes with a series of firsts:

• The first car with 4G LTE onboard
• The first car in this segment with MMI Touch.
• The first car in the segment with available full LED lighting.

And the A3 features the only retractable infotainment screen in this segment – and not just the only one in the segment, but one of the best overall. It’s got the thinnest screen.
Incredibly high resolution and clarity – powered by the same NVIDIA technology that is delivering graphics to a host of Android smartphones and tablets today. And – with a pioneering touchpad and navigation wheel combo – easier and more intuitive than ever to access content.

The A3 delivers another first to the U.S market, as the first car in the world featuring embedded 4G LTE connectivity. This allows a dozen advanced new features, such as picture navigation, read-aloud Twitter alerts, flight updates, enhanced parking finder, and access to more than 7,000 Internet radio stations.

But what we think A3 drivers will really enjoy is the speed. We’re talking about wireless technology that’s seven times faster than 3G. That means Google Earth and Google Street view navigation mapping or video streaming without any lag. It means true broadband performance for up to eight devices.

Put simply, never before has a vehicle performed so well on the information superhighway.

But we haven’t forgotten about the real highway, either. Because there are more traditional measures of speed for a car, and I want to introduce the Audi S3. Fans have been pleading for a performance-oriented model. We listened… and here it is.

The all-new S3 sedan has an estimated 290 horsepower, quick shifting dual-clutch S tronic transmission, sport suspension and available 19 inch wheels.

This is a car that takes its place in the powerful lineage of Audi S models which offer a degree of performance American drivers truly appreciate. The S3 will join the ranks of S4, S5, S6, S7 and S8, which are delivering up to 20% of their respective sales mixes.

These cars – the all-new A3 and S3 sedans – will be the vehicles allowing Audi of America to sprint to the milestone of 200,000 sales in this country far sooner than anyone ever expected.

And now I’d like to welcome a very special guest today:

Prof. Dr. Ulrich Hackenberg – the AUDI AG Board Member in charge of Technical Development – who will continue our story from Promise to Progress by introducing another very special Audi A3.