Audi: 'Crisis? What crisis?'

EDITOR'S BLOG: Noxious rear end emissions, anyone? Not me, mate. The Ingolstadt colossus marches on.

by Matthew Gwyther
Last Updated: 30 Jun 2016

Back to Ingolstadt for the latest round of optimism from Audi. Despite the storm clouds of the VW emissions scandal growing still darker - with the admission yesterday that senior management at VW Group were aware of something noxious as long ago as 2014 but did nothing about it - Audi carries on growing. It now sells twice as many cars as it did in 2006.

Audi Chairman Rupert Stadler whom MT put under the white light late last year reiterated that ‘We want to ensure that honesty is the most important business principle at Audi. We say ‘don’t find fault, find a remedy.’

So while the lawyers continue hand to hand combat in the USA with VW group, Audi charges on. Worldwide deliveries increased from the 2014 numbers by 3.6 per cent to 1,803, 246 vehicles. This is 300,000 cars above their own target. Audi made a cool €58.4 billion in sales which yielded an operating profit of €5.1 billion. US sales were up by 11% going over 200,000 cars. In the UK we bought 166,000. China is looking less robust. Conspicuous consumption risks having your collar felt in the night.

Stadler said that negotiations with the Federal Motor Transport Authority in the US continue and that as soon as these are complete a recall of the diesel engines will start. Ninety per cent of the affected cars have the 4 cylinder, two litre TDi engines which was in the Audi A4. The problem remains what will any software and/or hardware alteration of these engines do to the car’s performance? Will customers want something that comes back fresh as a daisy when it comes to rear-end emissions but feeling completely different and more like a Morris Minor to drive? What happens to all-important residual values?

What’s becoming clearer is that - as far as any effects on sales are concerned - the scandal so far appears to be a VW problem and not an Audi problem. Every effort is being made to protect VW’s premium and high margin brand. VW sales are suffering but Audi isn’t.

The small print within the annual report goes as far as to state of the scandal ‘based on certain contractual agreements, the Audi group is entitled to a corresponding compensation from Volkswagen AG.’ As a result there is no direct profit impact for the Audi group. Mind you, they do admit to 228 million euros of expense already due to the scandal.

What might be the Armageddon scenario here? If things cut up seriously rough could the group be broken up to protect the jewels like Porsche and Audi which produce 80% of group profit? Who knows? Probably only the controlling Piech clan. (There was hardly any mention of Piech’s departure from the VW board last year.)

Life goes on but one thing never changes in the car world. The all male Audi board panel on stage was only supplemented by females when two tall, attractive Teutons in very high heels appeared to remove the cover from the brand new Audi SQ7 . 0-100 kph in the blink of an eye thanks to a revolutionary electric-powered compressor. They even showed a film of the car out-accelerating an Alpha fighter jet on a runway. No turbo lag whatsoever. Yours for around £70,000. Rort rort.

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