I think that when you are in the luxury market, you need more than just product.
Johan de Nysschen has always wanted a career in the auto industry, but it wasn’t easy, not when growing up during the final days of the old apartheid regime, in South Africa, when most of the world’s automakers were convinced to grudgingly abandon the market. Eventually, however, de Nysschen found a way into the business, and has since served a variety of global assignments for Audi of America, including a stint in Japan and, now, a position as the CEO of the Volkswagen luxury division’s U.S. subsidiary.
While Audi of America wins numerous kudos from the media – and loyal owners – it has struggled to gain ground against better-known competitors Mercedes-Benz, BMW and Lexus, a point of frustration considering Audi’s huge growth abroad, global sales topping the million mark for the first time in 2008. But there are positive signs in the U.S., as well, where Audi’s market share has surged during the economic downturn. TheDetroitBureau’s Paul A. Eisenstein spoke with de Nysschen about the challenges of moving into the top tier of luxury brands – and how he can exploit the weaknesses of its competition.
TDB: While the Cash-for-Clunkers program didn’t do much, directly, for luxury brands, it certainly did have an impact on the overall car market. Can you talk about what you’re seeing happen?
De Nysschen: We had expected the total vehicle market to come in (for 2009) at 9.5 million, which made us one of the more conservative manufacturers. Cash-for-Clunkers injected some life into the market and overcame some of the inertia, so we’ve raised our outlook to 10 to 10.5 million. As for Audi, we sold about 600 cars through Clunkers, which, does nothing to materially change our business.
TDB: Maybe not, but you’ve done surprisingly well, despite the overall decline in the U.S. market.
De Nysschen: Audi has been a little more fortunate than most and kept much of its momentum. We’ve had the benefit of a new product line-up, so our incentive spending hasn’t been almost completely flat compared to last year. Our model mix has trended upwards, so our revenues are flat compared to last year. Last year, we did 86,000 cars, so we expect to end this year around 75,000 or 76,000 (but) we’ve had a significant increase in market share – to 8.1% of what we define as the luxury group, from 6.2% last year. Volumes are down just over 14%, but the sector has declined over 30. We hope to extend the momentum when the market comes back.