Deep Dive: The Approaching Storm at Audi

Brown Bird Design
#Audi, #R8

EDITOR’S NOTE: Wolfgang Dürheimer has been sacked as Audi’s R&D chief, the UK’s Auto Express reports. Dürheimer, who was at Audi for just ten months, “could be replaced by Ulrich Hackenberg following shock dismissal,” Auto Express says in its headline. But it’s no shock to anyone who read Georg Kacher’s story in the July issue of Automobile. For your convenience, we’ve brought it back to the home page of our website. Kacher’s prescient words about Dürheimer are in the fourth paragraph. Kacher confirms from Europe that Hackenberg is Dürheimer’s replacement, and that he’ll also retain his current position as the Volkswagen brand’s product chief. Dürheimer joined Audi last year, after serving first as Bentley and Bugatti CEO, then as a board member of Porsche.

It's good to be Audi. Bold designs, class-leading interiors, well-marketed technology, and Le Mans success have transformed the one-time also-ran into the number-two luxury brand in the world. And unlike its closest competitors, Audi also enjoys massive economies of scale as part of the Volkswagen Group.

But Audi's continued success is by no means cast in stone. Internal discord has sown product deficiencies and threatens Audi's stature within its parent company.

Rupert Stadler, who has led Audi since 2007, has many talents, most notably in detecting market trends and business opportunities. What the boss lacks, according to those in the know, is a willingness to take risks, make quick decisions, and commit to a visionary strategy. Look closely, and one sees signs of paralysis in projects that have either disappointed or died on the vine, including the R8 E-tron, the rotary-engine A1 E-tron, and the next A2.

The Volkswagen Group sought to address these failures last year by naming Wolfgang Dürheimer R&D chief and installing Italian Luca de Meo as the head of marketing and sales. This seems to have made things worse. Dürheimer likes to be involved in the details, questioning every investment, implementing his own ideas, and influencing the design language. This has ruffled feathers among senior managers accustomed to ruling their departments as independent kingdoms.

Meanwhile, Stadler, de Meo, and Dürheimer have yet to agree on key future products. Instead of new programs receiving the nod, we keep hearing of projects that have been shot down or that remain up in the air. How much longer must we wait for the revival of the Coupe Quattro? What happened to the A9 coupe and convertible that would continue the brand's march upmarket? We even hear that the R20, the street-legal Le Mans prototype that appeared on our April 2013 cover, is a no go.

Green-vehicle strategy has also taken several U-turns. Audi isn't on pace with BMW's Project i -- not even close. It hasn't played a leading role in developing the VW XL1. Even the A3 plug-in hybrid is a Golf in disguise, not to mention that current hybrids are overpriced and undesirable. There are conventional engineering deficiencies, as well. The brand's turbo-diesel four-cylinder, while good, is about to be trampled by more powerful offerings from other automakers. Even the vaunted Quattro system needs an update (less weight, less friction), and the A8's costly aluminum spaceframe should transition to a more intelligent mix of materials.

Watching all of this very closely is Porsche. The two brands contribute to the same bottom line, but make no mistake: there is no love lost between them. Both realize they won't forever be able to conceive their model ranges independent of one another, and each wants to be the senior partner. Audi already controls Lamborghini, Ducati, and Italdesign Giugiaro, and it makes more money. Porsche clears higher margins and is flexing its muscle through Bentley, for which it sought to develop the component set for the next Continental and Mulsanne; Audi fought back with its own component set, but in this league, two is a crowd. Porsche also claims to lead all VW Group sports car development, which would not only include Lamborghini but also the next R8. We smell conflict here. In short, Audi's management must steer toward a set of sustainable priorities, or else Volkswagen and Porsche will take the wheel.

I would love to buy an Audi as my daily driver. I bought an A8L for my mother a few years ago and it has performed flawlessly. I also know many Audi owners who swear by the brand and aren't shy about how great the cars are. -- The problem for me is that I think that their cars are boring. I'd be in the market for either an upmarket coupe or a sexier version of the A8 (the S model doesn't make it). For the past 20 years, I've driven mostly Mercedes CL models, but just recently switched to the Bentley GT. Why can't Audi build a car like that? I would by it in a minute. I'm only 44, but to me the best coupes are long gone. The Cadillac Eldorados and the Lincoln Marks of the 70s were the most beautiful cars on the road in their time (their may be a lot of disagreement here, but look at the 77-79 Mark V, or the 71-78 Eldorados. Those cars were totally impractical at the time because of their price and size, but since when does practicality really matter when you're spending top dollar for a car? They were unabashed status symbols and also totally luxurious, and there has not been another vehicle from Detroit or any imports that have nailed that market since, IMO. I want to buy the best personal luxury coupe on the market and the choices are few. Audi could fix that.
@tnp702lv Audi doesn't compete with Bentley because these two VAG group members are aimed at different segments, Bnetley being significantly more costly and hence exclusive.  The more mainstream Audi cannot help but be relatively more "boring" simply due to the fact that it must appeal to a mass audience, share some enterprise underpinnings and components, and thus reach lower price points.
It's unclear whether you are buying a "daily driver" as a fashion statement or if you wish your to be a responsive, practical, durable machine.  If the latter is acceptable, then what's wrong with Audi's fantastic S5?  Or since you seem to like large cars, the A7?
Audi offers as many excellent and exciting touring coupes as any other automaker.  If unabashed luxury status and exclusivity is what you're after, find a classic Deusenberg, Packard, or Bugatti. The elegance of those old beauties is infinitely better than the horrid styling of most of today's awkward luxury vehicles.

@tnp702lv Cool story. Audi has no conceivable reason to reach that far upmarket, its just nonsensical. Under the VW Group umbrella, there's you're aforementioned GT to satisfy the uber luxury role that you so yearn for (I believe the A8 you mention and 'GT use the same platform). The market would be over-saturated with VW product in a market that's limited at best. As a business move it makes no sense. Audi (or any German brand for that matter) has never been about insufficiency for a romantic feeling or nostalgia, Audi themselves prefers to leave that emotion for Lamborghini/Ducati. Interesting dynamic at VW Group to say the least.
@jbernard@tnp702lv  Kudos Gentlemen those were two of the best thought out, and well written comments I have seen on a long time. Each argument rationally presented and brief.

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