okkazo

Hi there,

A question I have been seeking an answer for a while. I configured an A7 on the US website with similar equipment offered here in the GCC. I found that the difference is ~13K USD!! (both excluding taxes). Both prices are MSRP, so I think they are suggested by Audi. Also, it is very hard to find a discount here due market monopoly as Audi appoints a single dealer for each country.
Why does Audi charge us 13K USD more? given that the economics have changed here + Audis are not very popular

Derboy

19hole

Lots of different import duties and local taxes. Smaller markets have higher cost of doing business.

doctorharrison

I once did a trial build on an EU site, Ireland I believe. The Build was totally á la carte instead of offering Option Packages and thus the pricing was significantly higher as well. That being said, the EU Configurator was far more comprehensive - including Adaptive Suspension, Dynamic Steering, Black Optics Package, choice between most wheel styles, colors, etc. Granted the AudiUSA build site is most likely still incomplete (eg Comfort Seats are missing as are body colors: Avalon Green is touted on the primary vehicle seen throughout the US A7 brochure, yet is nowhere to be found on the Build site).

We can only hope that AudiUSA will not only complete the online Configurator, but expand the offerings to more closely align with those in the EU and elsewhere such as South Africa, the launch site for the A7.

Glisse

Audi are neither made in the USA, nor is the American dollar Audi's operating currency. Use the German pricing as your benchmark. I'm not sure why you would expect one of the Gulf states to have the same pricing structure as the US market, although I can understand you may wish it did. Everyone outside the US wants US pricing. Many of those within the US think their prices are too high

The reasons for low pricing in North America are largely historical, and then the typically competitive price matching between Audi / BMW / Mercedes has maintained that position. Whilst VAG make little margin from Audi in the US as much of their manufacturing is in Germany and their cars cost more to make than BMW or Mercedes equivalent models, they make a lot from Porsche. The situation is reversed in Europe. The final factor is that there is little discounting in the US. In "full price" markets, commercial fleet discounts can be very high - for Audi, BMW and Mercedes. These discounts are made up from a contribution via the manufacturer and the distributor. There is no such arrangement with North American cars. Audi of America are treated as a giant fleet purchaser, and so private purchasers in the US are effectively getting their Audi / BMW / Mercedes at fleet pricing. The downside is that the "fleet manager" restricts what is available in terms of options, etc.

Your implied suggestion that Audi should discount the prices of their cars in Gulf states to stimulate sales lacks any supporting evidence. Unless there is a significant premium to equivalent Mercedes or BMW products, then Audi would be completely mad to cut prices. And the volumes for the entire Middle East region are tiny - if you are only paying USD14k more for an A7 than the US pricing, you are doing pretty well.

As for popularity, perhaps you are unaware that Qatar Holding LLC is the third largest shareholder in VAG? Given the political situation within the Gulf states, it seems this would make any VAG vehicle unpopular anywhere in your region other than Qatar. Kuwait has a decent slice of Daimler, so perhaps Mercedes are doing rather better in terms of popularity? Probably depends on where you live.

okkazo

^ Audi Dealer GM told me that they sell 1:5 ratio comparing to Lexus and I believe 1:3 comparing to MB.
Lexus is very popular here due its low maintenance cost, good prices (cheaper than the US), and great dealership.
I am also aware that Qatar is a shareholder in VAG, but this has no relation with the current political status. Audi has been the least popular luxury German brand here in the GCC for a while. It started gaining some popularity after 2011 when the introduce their new strategy, but still they are not comparable to BMW here. & there mountains and seas between them and Lexus & MB in terms of sales and popularity

Glisse

^^
It differs dramatically from market to market. Very different in the European region. Lexus sales in Europe are tiny, Toyota's product positioning for Lexus simply doesn't work here. Same for Nissan's Infiniti brand, and Honda's Acura.

Audi has outsold BMW in Europe for the last several years. Mercedes only caught Audi at the end of 2016. Audi has never sold very well in the US vs their main competitors, although they are improving - BMW seem in a bit of trouble. But whilst Audi prices in the US seem low to you (and to everyone else outside the US), they are parity priced against BMW and Mercedes. They are not going to cut the price in the Gulf states to stimulate sales, and your pricing doesn't seem so far away from typical European pricing, ignoring taxes. There is no doubt several reasons for these sort of differences between regions. An obvious one is that Audi have sold relatively well in Europe because traction is an important attribute in many countries. The rest probably comes down to product mix decisions, marketing, and the quality of the local distributor. And Audi senior management are notoriously Euro centric (probably German centric at that), possibly a function of their predominantly German based manufacturing operations. They don't get out much .

I was in the UAE recently, and did see Lexus everywhere, and every serious AWD was a Land Cruiser.


EUROPEAN SALES:

Source: CarSalesBase.com
Audi is Blue, BMW is Red
Note Mercedes includes commercial vehicles: Vito/Viano, Sprinter, etc.


USA SALES:


Source: CarSalesBase.com
Audi is Blue, BMW is Red

okkazo

^^
If I get you right, you basically saying that their lower prices in the US for competitive reasons? because they need to get after MB and BMW since they are more popular than them; correct? if so, why don't they follow the same equation in the GCC? since they are way behind, and an additional competitor is new variable in the market as well (Lexus). For example, the new Lexus ES350 is launched here 3-weeks ago, and I oh god I stated seeing everywhere! while it is similarly priced to the A5 and A6 for instance. To be honest, the issue doesn't come down to the pricing only. The dealer network here is poor and there is a false perception that Audis are unreliable. Given that GCC is not a small market (only KSA counts for about 1M car/year).

Glisse

^^

No, Audi are lower priced in the US because BMW are, and Mercedes are too. They benchmark each others' prices, in virtually every market they compete in.

If an Audi in your region is more expensive than the equivalent Mercedes ( a CLS) then you have a point, but I doubt that is the case. An Audi A7 55 should be similar in price to a CLS450, although it isn't easy to compare trim levels.

A new Lexus ES350 sells for $39,500 in the US. An A5 SB starts at $42.500, and an A6 at $58,900. So Lexus seems to be selling at a substantial premium in your region, vs the US. So not a good reason either for Audi to cut their prices in your region. And if you are concerned on costs, buy a new C8 A6 as the A7 carries a hefty premium for the body shape. Be a much better car than an ES350, I suspect.

Just do a budget, then a list of cars that you potentially may like that fit in that budget, drive them all, and buy the one you like the most. And what one or more of those cars sell for in a foreign market doesn't make any difference in this equation. Works for me.

okkazo

^
Lexus here comes with more equipments. We don't have standard models similar to the US and Europe. If you pick similar equipment in the US, it will definitely cost more. Note that here the prices are not negotiable like the US. BTW, do prices in the German website for instance include VAT?