Wearing no tie and without a podium, CEO Bram Schot told the story of a car maker whose sales dropped 3.5% worldwide. Sales in Europe dropped 13.9%, the US by only 1.4% but they were up in China by 10.9%. Operating profit fell 24% from 4.6 to 3.7B Euros, net cash flow went from 4.3 billion to 2.1 billion euros. The new WLTP emissions was a big part of the sharp drop in profits and sales in some markets.
2018 was a hard year for Audi, we’ve seen most car companies struggle to maintain strong performance numbers when investments in new business models and technologies have yet to be profitable.
Electrification is key.
Audi will launch five fully-electric and seven plug-in hybrid models within 24 months to overhaul its lineup and consider switching one of its existing model lines to battery power. It will broaden the lineup to 30 electrified cars by 2025. One of those models will be the production Q4 E-Tron, which was previewed at Geneva this year, and will go on sale in 2020.
Asked whether now is the right time for such an investment in EV technologies, Audi CEO Bram Schot said that feedback from customers suggests “60-70% of drivers of electric cars are loyal to electrification” and that response to the brand’s new E-Tron electric SUV has been overwhelmingly positive.
Like everyone else, China is key to Audi’s strategy they’ve increased their targets sales to 1 million cars from the 600,000 they currently sell. They are also reviewing strategic options for its joint venture in China, there have been no new developments since news that local rules for foreign manufacturers were eased.
Audi has set goals to make all of its plants CO2 neutral and we’re actually going to dive into this a deeper over the next few days as we’re currently on route to see Audi’s CO2 neutral plant in Brussels.
Audi embraces it’s slogan, Vorsprung durch Technik, “Breaking ahead through technology”
Audi will invest 14 billion euros on new technology including autonomous driving, electric cars and digital services by end-2023 and will cooperate more fully with sister brands VW and Porsche help lift returns and plans to put a greater focus on its largest market China.
Sometimes what’s not said is the most interesting
Group synergies was a term that was thrown around a lot over course of the two hour event. Cost saving by using resources from other groups. When the press conference drew to an end and we hadn’t heard any plans for digital services or for urban centers Audi’s vision started to come into focus.
Volkswagen We have been working digital services which could potentially be rolled out to the whole group. Porsche Digital is a separate company from Porsche cars and is responsible for the most dramatic infotainment system upgrade we’ve ever seen. Digital services were completely left out, but leveraging group synergies for this is a possibility.
In the Q&A session, the electrification of the A1 was brought up, we were reassured that going electric didn’t mean Mild Hybrid, it meant at least full hybrid or plugin. But we heard nothing on more. The A1 is really the only car in Audi’s line that is directly aimed at urban living with its smaller size makes it easier to park in city centers.
We hope that this doesn’t mean the car maker is conceding the space to sister brands like SEAT or VW. We hope that premium and luxury don’t just mean SUVs and L versions for China. It’s something to think about over the course of 2019 as we see their strategy unfold.
To sum it up:
Its been a hard year for Audi, but their aggressive e-mobility strategy is front and center with their new CEO Bram Schot. He has a hard road ahead, but late last year at the MQ Summit, I heard the words of a man who understood that Audi needed a fundamental change. He encouraged his team to ask for forgiveness rather than seek permission. After a press conference full of sincere apologies, we hope that he has to resolve to stay the course and be done with solemn apology and move on to one done with a cheeky smile.