Bada Bing

I was just responding to his asserion that since Audi loses money on each A8 they make, somehow the car should be more than worth its price tag. Audi is losing money on the A8 because they only make about 15,000 of them per year. A lot of the construction and assembly is by hand. Also, the first generaton ASF is very expensive to manufacture and assemble. Just because the car costs Audi a lot of money to make doesn't mean that it is somehow a better value than a mass produced car (e.g. S500) of equal quality. The buyers and the market determine if the high cost of making the A8 is justified. Based on resale values, I would say that most luxury car buyers don't put that much of a value on the technology and quality that the A8 offers. I think Audi is to blame for this, as they spend next to peanuts maketing the car and its virtues. Also the car looks a bit dated inside with rectangular dash lines.

By the way, for the second generation A8 which debuts in 2003, Audi is reducing the cost of building the A8 by using a less costly ASF and by using fewer body panels and improved bonding/welding techniques. Chances are that Audi will be able to make a nice profit on the next A8.

silverA8L

Actually, that's from one of the car mag's article, it's not my assertion (I just forgot which issue and what car magazine it was!). Your explanation is definitely valid. It's definitely cost ineffective for Audi producing such a low volume for its flagship. However, since many parts of the car are made by hand, so there's that sense of exclusivity (you'll have to get a S600 for that feeling). For many, the quality of the new Mercedes vs. Audi is the same, but for some buyers, the cabin quality matters more since you are living in it during most traffic congestions or highway cruising. The newer Mercedes are not as good as the previous models IMO. Mechanical wise, they are excellent; but the interior quality is definitely not as good as the early Mercedes. If you have read most of the luxury car comparison in the past year, the Audi has always been the one that's praised for it's interior quality. Besides, the A8 is almost like an experimental car for Audi (certainly for the ASF technology). After the 1994 introduction of the Mercedes C-class, most Mercedes are now build with a budget in mind. Which is why Mercedes managed to survive their financial crisis in the earlier years and become a very profitable car maker using its heritage. (this actually came from the British mag, Car Magazine, latest issue). Even today, there are still cars that are build not for profit, but for many different reasons. Take the BMW Z8 for example, it is said to be an image builder rather than built for profit. Others such as the M5 and M3, they are exceptional cars, but BMW decided to limit its production rather than mass producing them. In earlier days, there's also the Acura NSX.

The reality is, most North Americans just started to recognize Audi as an alternative luxury brand from BMW and Mercedes when the A4 came out. The car sales increased significantly in comparison to the pre-A4 years. Since demand for the A8 is much lower than a 7-series or a S-class, the resale will be cheaper (similar to Jaguar's resale value). For a lot of people who purchase (not lease or finance) these cars, I don't think the resale value matters if you drive it for a long time or trade you car in every several years. When we trade in our Mercedes in 1997 and 1999, we got 50% of what it was worth when new from a Mercedes dealer trade-in. It would've been even lower if it was in, say a BMW or Audi dealer. I would think the same will apply for Audi and BMW.

I'm not really here to argue or object what you said, but just to let you know why I think the A8 is not cost ineffective. Again, it's just different point of views and definition of value.

As for the future A8 being a lot more cost effective, I'm sure that is mainly due to the experience that Audi gained through this A8 and the A2 to develop a much better system of production. With the luxury car segment being more and more competitive, Audi will need to keep the price of the car pretty much at the current level since both BMW and Mercedes found ways to produce them at a lower cost to maintain a competitive pricing.