The Audi AG, one of the world’s most successful car manufacturers in the premium segment, succeeded in maintaining its earning power in the first half of the year, despite the major challenges encountered on worldwide automobile markets and the difficult overall economic situation. In group succeeded in avoiding the effects of the negative overall market trend, and recorded a significant operating profit of 823 million euros. The Audi brand is also hitting its sales targets: in the first six months, approximately 466,000 cars were delivered.
In Korea too, the company has been performing exceedingly well, and is one of the most recognized imported car brands. Audi Korea currently captures about 12.5 percent of all vehicles imported to Korea, having sold 5,280 cars until September this year.
As noted by Mr. Trevor Hill, Managing Director of Audi Korea while the global market is down and the car import market in the country has decreased by 15 percent this year Audi is doing really well, as sales on average are up 40 percent from last year
“Our recent growth is largely the result of the company’s aggressive rollout of new vehicle models and our marketing strategy. Most of our customers are drawn to Audi’s sophisticated urban design, raising its brand recognition and further propping up sales. Audi also has outstanding advanced technologies in this field, including engine technologies and energy management systems,” he told me in an exclusive interview.
Audi’s core marketing strategies include maximizing premium brand image, strengthening dealerships and launching new models.
The Korean consumers identify with Audi’s sophisticated looks and design, and it is the most dynamic prestige brand. Audi vehicles are famous for their world-best design and high emotional quality. The company also has various advanced technologies such as a quattro permanent four-wheel drive system and TFSI engine technologies that enable more dynamic driving, he said.
The models that the company has launched this year include A5, A4, Q5, TTS, A4 2.0 TFSI, Q7 facelift and A6 facelift.
The A5 is equipped with the latest technology from the German carmaker including a driving system that allows the driver to choose from four different driving modes - comfort, auto, dynamic and individual - and adjust the car's performance and handling to fit each driving mode.
The new A4 2.0 TFSI is fitted with eight-speed multitronic step-less transmission. Its speed tops out at 210 kilometers per hour and the official fuel economy is 12 kilometers per liter. Mr. Hill noted that TFSI, a gasoline direct injection engine technology, has increased fuel efficiency up to 15 percent with more power compared to traditional gasoline engines.
Audi TTS comes with a 2-liter TFSI engine that puts out 265 brake horsepower. The coupe model of the vehicle is capable of accelerating to 100 kilometers per hour in 5.2 seconds. The zero-to-100kmh acceleration time is 5.4 seconds for the TTS Roadster. The vehicles are equipped with the six-speed S-Tronic dual clutch transmission.
The new A6 lineup consists of the A6 2.0 TFSI, A6 2.0 TFSI Dynamic, A6 3.0 TFSI Quattro and the A6 3.0 TFSI Quattro Dynamic.
“While most Audi vehicles are achieving good sales numbers, the A4 and A6 have been performing really well in the local market. Korean customers have very sophisticated tastes not only for design, but also for performance and driving pleasure,” he said.
The company has a sales network of 16 showrooms and 14 service centers nationwide. As for dealerships, it recently renovated a showroom in Jeonju, North Jeolla Province, into the first dealership here built as an ‘Audi Terminal.’ Its second will be introduced in Masan, South Gyeongsang Province, later this year, which will be the largesdt showroom in Asia, he said.
The strategy that Audi has adopted is ‘lifestyle marketing’, whereby the company is focusing on customers’ lifestyles rather than just on vehicles. For this reason, the company regularly sponsors VIP events and gives their customers a chance to experience royal treatment.
"We invited the world-famous band Jamiroquai here for Korean customers and also invited our VIP customers to the most famous music festival, the Salzburg Festival. These are the examples of our lifestyle marketing activities, which only Audi customers can experience,” he said.
He also mentioned the company’s activities concerning golf, which have proven to be highly effective marketing instruments. Golf courses have become ideal places of business and have opened the door for talks with existing and potential customers. The Audi Quattro Cup places the relationship between buyer and seller in the foreground.
This year the Quattro Cup finals will be held in New South Wales Golf Club in Sydney, Australia from December 14th–18th, where the team from Korea will be competing.
He said one of the main priorities is to increase Audi’s brand power in Korea. While the company’s brand awareness in Korea has dramatically increased in the five years since the company’s establishment in 2004, the future holds much promise.
In this context, he also mentioned that the EU-Korea FTA negotiations which have been concluded and await ratification would provide a good opportunity for imported car manufacturers to increase their market share.
EU-Korea FTA
As regards cars, the elimination of tariffs will be extended to five years for certain types of vehicles. The EU has rejected Korea's proposal for the immediate abolition of tariffs on small cars. Tariffs on cars with an engine size of more than 2.5 litres would be scrapped within three years whilst tariffs for less powerful cars would be scrapped within five years.
As per the preliminary analysis, the domestic automobile market will experience heated competition due to formidable price competitiveness of EU-made vehicles, especially in the luxury car segment.
In 2008, the EU cars account for 53% of Korea’s import car market and mid- and full-size autos with over 1.5 liter engine displacements, in particular, take up an overwhelmingly large part of the Korea’s imported auto market. Moreover, since tariff on automobiles with over 1.5 liter engine displacements will be the first one to be removed, the EU’s mid- and full-size models will gain recognition earlier than small cars in the Korean car market.
“EU-made cars will also be attractive to consumers who had been buying inexpensive, mid- and full-size Japanese cars. Nowadays, the Korean automakers have been producing new models in the mid- and full-size vehicles in the premium tier, which will intensify the competition much more in the domestic market,” he said.
“However, we have information that some of our concerns regarding the barriers to trade in Korea have not been addressed in the FTA, especially with regard to fuel efficiency standards. That is something we will have to work on,” he said.
Speaking on the opposition to the deal by the European Automobile Manufacturers’ Association (ACEA), which is worried about the “huge influx of Korean exports into the EU market, with little gain in exchange,’ he said that they had valid concerns.
“It will have a serious impact on employment in the European manufacturing sectors and is something that the respective member states will have to prepare for from the beginning,” he said.
