Re: cost of selling a4 in the US

[Eliot Lim <eliot@u.washington.edu>]

On Tue, 7 May 1996, Psycho Bob wrote:

> > If you believe the first part about the subsidy, then it becomes hard to
> > support the second part about higher volume being a positive development for
> > the bottom line. Sort of like "We lose money on every one, but we make it up
> > in volume."
>
> The A8 is a money-loser alright. But I cannot see how A4 is losing money
> for Audi in the U.S. I thought the A4 was the money-maker, in addition to
> the up-coming A6, that will support image leader like the A8. The hope
> was that A4 will sell in quantity. If Audi does lose money on every A4 it
> sells, then Audi is in big doo doo.

i think that the a8 is a money loser worldwide.  it is a marketing exercise
intended to uplift the image of the entire company.  so if you look at the
car itself you may wonder why they want to even make it.  but look at the
big picture at it makes more sense.

as for the US market i'm sure the current "subsidies" are not going to
be a long term affair.  they're trying to win back market share and
create a market presence.  i'll leave it for the MBAs to explain the
significance of that.  when i said "selling at a loss in the US market
is good for the bottom line" i was certainly referring to the long
term, not the short term.  i thought that was obvious.


eliot