Audi Plant in America? - Additional Info

["Rusty A. Schlacke" <oxide@worldnet.att.net>]

Some additional info on the possible Audi plant in the U.S.

Automotive News
March 17, 1997

Diana T. Kurylko and Lindsay Chappell

	Audi AG is again studying whether or not to build cars in the United
States.
	Flush with an uptick in sales and the arrival of new products, the
automaker could join other German luxury makes that have opted for North
American production in recent years.
	But Audi representative in Germany and the United States are playing
down ambitions.
	"We are doing a survey on whether it makes sense to produce there or
not," said Audi spokesman Norbert Essing in Germany.  "We are far away
from anything that may have the slightest characteristic of a decision."
	Maria Loenhauser, spokeswoman for Volkswagen of America, Inc., said,
"Audi AG looks at many countries around the world to see whether it
makes sense to increase our presence, and certainly the U.S. is one of
them.
	"We are not conducting a feasibility study," she said.  "There would be
no factory before the year 2000."
	Audi has considered the idea of a U.S. plant several times before.  The
current sally appears to be part of a worldwide examination of Audi’s
manufacturing needs.
	Any decision about a U.S. site may hand on two questions:  Can the
company nearly double its U.S. sales volume from 27,379 last year (up
from 12,575 in 1994) to about 50,000 units by 2000?  And can it raise
the prices of its cars to yield bigger profits?
	Audi wants to make more money in North America, its biggest market
outside Germany.  Audi’s vehicles are currently priced at about 85
percent of what BMW fetches for comparable models in the U.S. market.  A
company insider says that, if sales volumes in the United States rise to
50,000 unites, Audi could consider putting its prices more in line with
its German prices – which are about 95 percent of BMW’s.

BRIST SALES OF LATE
	Audi believes the goal of 50,000 units is reachable because of the
brisk sales of the A4 and this year’s arrival of the A6.
	Last year, Audi sales jumped by more than 50 percent.
	The company could stoke the fire by bringing its racy new Audi TT coupe
and TTS roadster to dealers in the United States some time after the
cars go on sale in Europe in 1998.
	At that same time, sister marque Volkswagen will begin a U.S. marketing
blitz for its new Mexican-made Beetle.
	Success of the Beetle here could spill over into interest for small
Euro-cars like the TT and TTS.

NEW OUTLOOK
	Less than 10 years ago, it was deemed impractical for a luxury importer
to consider a U.S. assembly plant.  But now BMW AG and Mercedes-Benz AG
are producing here.
	Several factors have changed:
*	Carmakers no longer have to think in terms of 250,000-unit-a-year
mass-production factories in order to be profitable.  BMW’s South
Carolina plant was built to produce only about 90,000 cars a year.  The
new Mercedes plan in Alabama intends to turn out just 60,000.
	One reason is that suppliers are taking on more of the customer’s
overhead by doing more of the subassembly work.
	Both Mercedes and BMW have outsourced their entire stamping
operations.  Several key vehicle systems arrive at the plants fully
assembled.
*	Exporting from a plant in the United States is more attractive than it
used to be.  That makes it feasible to build a plant here that doesn’t
have to rely on the North American market.
	BMW and Mercedes will both export half of their U.S. production.
	In Mercedes’ case, that means the U.S. market must consume only 30,000
of the new plant’s units.
*	The luxury-minded Europeans now accept that U.S. workers can deliver
the same quality as their established German workers.  That was proved
largely by the success of the Japanese automakers in the United States.
	Companies like Honda Motor Co. and Toyota Motor Corp. now stack up
their U.S.-built products against their Japanese versions.

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Rusty A. Schlacke
Cedar Rapids, IA
'95 A6 quattro (5 speed)