Re: Audi Price Cuts

["David R. Derting" <davidder@teleport.com>]

On Thu, 13 Oct 1994, Franklin Fasano wrote:

> 
> A friend tells me that if the recent price cuts fail to improve US sales, 
> Audi intends to pull out of the US market.  He claims to have read this in 
> one of the car mags, but couldn't find the article when I asked for it.. 
>  Can anybody confirm or deny this.
> 
>  -Frank
> 
Hi Frank,

I just finished my MBA so I'll give you a marketing slant on Audi's 
situation.

Other than a public announcement from VW I think it would be difficult 
for anyone to confirm or deny.  There are people who make their living 
trying to figure out these kinds of questions, by the way.  If you know 
anyone who can be correct about these kinds of questions more than 50% of 
the time, let me know as I'd like to talk about a business arrangement!

I do remember Mr. Piech (I think I 
have the spelling right), chairman (CEO or what ever) of VW/Audi, when 
speaking about VW's low sales in recent years, stating that VW couldn't be 
a serious player in the world car market without having a position in the 
USA.  One might extrapolate the same point for Audi.  Furthermore, if VW 
would withdraw the Audi line from the US the chances of returning when 
the VW's income statement situation were better would be slim. 

Audi's problem, in my opinion, is that the market still has lingering 
doubts about product quality (compared to world standards, this is 
probably valid) and is not sure what an Audi really is . . .  BMW = 
"ultimate driver's machine" (also status symbol for the nouveau riche, 
ditto for Lexus), Mercedes & Jaguar = status symbol for old money, etc.  
>From this point of view  Audi is a big black hole in a very crowded 
product field.  I don't think that the Germans understand this near as 
well as the Japanese car makers.

Will they withdraw? I don't think so because it's a one way trip.  
Furthermore, I hope not.  I like Audis ('cause they are different 
and innovate) and I hate to see what would happen the parts and service 
costs if the line was withdrawn.  Let's see $800 for an new TQC manifold 
now, $2,400 if there are no Audi dealerships about.

I'd be willing to bet at least $.25 they'll jerk around with price and 
promotional tactics for the next year or so and while they try to deal 
with the lingering Audi 5000 stigma.  I notice the new names for Audis are
A4, A5, A6, etc.  This is probably another attempt to distance the name 
from the dreaded 5000 unintended acceleration ghost.

David

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