Deep Dive: The Approaching Storm at Audi

strong>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.