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Audi Aims to Topple BMW as Luxury Sales Leader

Targets 2 mil annual sales; big surge in new products critical.

by on Mar.12, 2013

Audi CEO Rupert Stalder introducing the A3 e-Tron at the Geneva Motor Show last week.

Fresh off its strongest year ever, Audi AG is taking aim at German rival BMW AG and promising to become the world’s largest luxury automotive brand.

The maker is planning to invest more than $14 billion through 2015 to support its ambitious goals, funding a product program that will cover the increasing breadth of the luxury segment, from the small A3 hatchback to an assortment of new crossover-vehicles, such as the planned Audi Q6, said CEO Rupert Stadler. It also is investing in a number of new assembly plants, including one planned for Mexico.

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“There are years in which to harvest in our industry and there are years in which you sow,” said Stadler at Audi headquarters in Ingollstadt, Germany.  While the cost will be significant, the payoff should come by 2020, when the executive added, “we are preparing to (sell) two million cars annually.”

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Audi Opts for New Plant in Mexico

Anticipates cost of less than $2 billion.

by on Apr.19, 2012

Audi Chairman Rupert Stadler introduces one of the maker's new models.

After years of debate, luxury maker Audi has finally won approval from parent Volkswagen AG to build a new North American assembly plant that could help fuel its record growth in the U.S. and other markets.

But the maker of products like the A6 and Q7 has decided to locate the facility in Mexico, rather than the United States, it has announced.

“As an established carmaking location, Mexico offers an excellent economic basis for Audi production operations,” said Audi Chairman Rupert Stadler. “Mexico is one of the world’s top ten automotive locations and offers a blend of tradition and experience.”

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Mexico now has significantly more production capacity than its own market needs might justify, industry analyst note, and continues to gain more rapidly.  Nissan recently announced a multi-billion-dollar project near Aguas Calientes, with alliance partner Mercedes-Benz considering a nearby site. And Honda earlier this month broke ground on a new plant in the country that will produce the subcompact Fit, among other models.

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Audi May Get Go for New North American Plant Tomorrow

But maker reportedly leaning toward Mexico v US.

by on Apr.17, 2012

Audi CEO Rupert Stadler, shown here with the etron concept, reportedly wants the new plant in Mexico.

The long-delayed decision on whether to build an Audi plant on this side of the Atlantic could be resolved as early as tomorrow, insiders suggesting that parent Volkswagen Group will formally give its approval on Wednesday.

But other reports caution that the new factory is more likely to go into Mexico than the U.S. Mexico has become a hot spot for global automotive manufacturers looking to take advantage of its central location, low manufacturing costs – and the extensive array of automotive free trade agreements Mexico has lined up with countries around the world.

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The parent VW Group is apparently supporting the idea of building the new plant in the States, according to Germany’s Automobilewoche magazine.  But Audi CEO Rupert Stadler has been lobbying for a site in Mexico.

VW recently opened a new factory in Chattanooga, Tennessee and has seen a sharp surge in demand for the Passat model produced there.  That has led to a rapid expansion of capacity in Chattanooga.  VW may prefer to take advantage of the supply and distribution network set up to support that factory.  And it might see an advantage to placing a plant in the U.S. as a way to help spur demand in one of its weaker markets.

While Audi has been setting sales records in the United States, it still lags sharply behind key competitors BMW, Mercedes-Benz and Lexus, even though the VW brand is now one of the top sellers in the global luxury market.

The “Made in USA” label could prove important in boosting sales, Michael Macht, the VW Group’s manufacturing chief, told Automotive News earlier this year.

But there are plenty of reasons why Audi CEO Stadler appears to be favoring Mexico, sources stress.  Indeed, VW has long favored the Spanish-speaking nation where it has been building such models as the Beetle.

The typical Mexican automotive assembly plant’s total labor costs run about $8 an hour, according to industry data.  Quality has proven extremely high.  There is an extensive supplier network and reasonably good distribution system for completed vehicles.

Among other things, Audi might be able to directly tap a new powertrain plant in Silao, Mexico, which will launch production next year and offer capacity of up to 300,000 engines annually.

Meanwhile, Mexico has signed more automotive free trade agreements than any other country except Israel, meaning minimal duties on products exported from the country.  That could be seen as particularly useful to supply Audi’s growing sales in not only the U.S. but emerging markets, like Brazil, Chile and Argentina, in South America.

Audi isn’t the only high-line maker weighing its Mexican options.  Mercedes-Benz recently announced that it will build a second North American plant to supplement the existing facility in Alabama.  While officials only say they are considering several options, insiders have told TheDetroitBureau.com that the German maker is leaning heavily towards a site in Aguas Calientes.

That would put it adjacent to, and perhaps even on the actual campus of, a new Nissan plant announced earlier this year.  Mercedes’ parent, Daimler AG, has been rapidly expanding its partnership with the Euro-Asian Renault-Nissan Alliance. Among other things, that includes providing the MFA small car platform that will be used for a production version of the Infiniti Etherea concept vehicle.

The Daimler plant, if it goes to Aguas Calientes, may produce vehicles for both Mercedes and Nissan.

As for Volkswagen, both the Chattanooga plant and the Audi facility would become critical pieces in the maker’s plan to achieve global dominance by 2018, when its various brands aim to collectively sell at least 10 million vehicles annually.

VW May More Than Triple Size of Chattanooga Plant

From bomb bunker to ground zero in the battle for automotive supremacy.

by on Jun.14, 2011

A nearly-completed 2012 Passat gets ready to roll off the line at VW's new Chattanooga plant.

If some of the early construction crews were a little nervous when work began on the new Volkswagen plant in Chattanooga, three years ago, they had a good reason.  In an irony not lost on members of the team overseeing the project, the mounds dotting the abandoned site had once housed World War II – era bunkers where the U.S. military stored bombs that would eventually be dropped all over Germany – perhaps on the VW plant in Wolfsburg, in fact.

To everyone’s good fortune, the bunkers proved empty.  And the fact is, these days, relations are a lot friendlier between the two countries.  But the sprawling facility is still on a war footing of sorts.

After years of dithering over its role in the U.S. market, Volkswagen has made a commitment to more than double its sales by 2018, to at least 800,000 vehicles annually.  Meanwhile, it hopes to bump its worldwide volumes to more than 8 million, Volkswagen AG CEO Martin Winterkorn declaring, the company “continues to have its sights firmly set on capturing pole position in the automotive industry.”

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Chattanooga will play a critical role in meeting that goal – and that means that the plant that formally opened in the Southern heartland, last month, could very well undergo a significant expansion in the very near future.  Indeed, TheDetroitBureau.com has learned, capacity could readily more than triple, according to a senior manager, “if it were appropriate.”

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