And understated has been Audi’s approach in the fleet market as well, but no more. Head of business sales Adrian Short is gearing up for a high profile, three-pronged attack focusing on network, product and image on the premium fleet market over the next few years with the intention of wrestling the top spot in the sector from BMW.
BMW is a major preoccupation for Audi UK, as its rival has set the bar for residuals, volume and strong brand positioning. But Short reckons that Audi is catching fast, not just in cold hard numbers but in more abstract factors like brand strength.
He said: ‘The power of the Audi brand across Europe is extremely good, and we have a little bit of work to do in the UK. Tracking against BMW, who are the market leaders, the gap between us and them is narrowing. It’s not going to happen overnight and it doesn’t suddenly change from being in one position to another. We have to work on that and show people the brand.’
The key element is still sales, though, and in this area Audi has seen remarkable growth over the last decade. It’s an upward curve which seems to get steeper each year as more products hit the forecourt. In fact, the UK is now the second largest Audi market in the world after Germany.
In 1995, Audi UK sold about 20,000 units, a figure that will have almost quadrupled by the end of this year to just under 80,000. But Short is not purely focused on increasing volume irrespective of all else.
‘You can grow volume, but if the market grows with you, then are you actually growing or are you just meeting the demands of the market? We have actually grown our market share in that period. In terms of the premium sector, it is growing above the market as a whole, which is fantastic news for us, and we’re well over double the premium growth as well. There are winners and losers – BMW is up slightly, Mercedes-Benz down slightly.
‘But it’s not just about volume, it’s about how we do it and whether we do it profitably. One of the major focuses we have is on Audi sales centre profitability. The more profitable the centres, the more likely they are to invest in good people, in good systems and processes, and that inevitably leads to better customer satisfaction.’
Developing the network of Audi centres is an essential element of moving the firm forward. Short said: ‘You have to have a network which is behind you, supports everything you do and delivers the best possible service to customers.
‘It gives us the capacity to grow because the network is getting good returns from the business, which also means they can employ the best possible people. We want to create more million-pound Audi centres. It’s a real brand statement.’
And that doesn’t just mean dealing in new cars. Managing residual values of used cars, and bringing them up the few points they lag behind BMW, is at the forefront of Audi’s approach to increased success in the fleet sector.
Audi has not been strong on looking after its older, three years-plus cars in the past, Short admits, preferring to concentrate on nearly-new, but he said the firm was putting measures in place to deal with the used, ex-fleet market.
He said: ‘The used car market is huge and it is something we have to be actively involved in if we are going to have influence ourselves as a brand. But we’ve got to make sure we’ve got the right proposition to go to market with.
‘We are focused around the nought to two-year-old car market in our network and demonstrators and nearly new. It’s very profitable and it’s a good market to be in, but if we’re going to be serious about new cars, we need to be targeting the older cars. We need a proper plan of attack.
‘We’re looking to double the volume of used cars sold through the network. The more sold, the more desirable the cars are. We need to really make sure we are getting the right price, and need to equal the new car ownership experience.’
The problem for a car firm expanding so rapidly, though, is capacity – space to display new and used cars and workbays and servicing facilities. Short terms it ‘growing pains’, but reckons that it can be overcome through profit. If the network is making money, it can invest in more facilities and people.
‘Quite clearly, used cars support new car volume – we don’t just do used cars for the sake of used cars. It supports our overall business plan and means that we can positively influence RVs and also reduce the cost of change,’ he said.
To complete the circle, there needs to be a steady influx of new product and there appears to be no shortage of that.
Short said: ‘This year has been difficult because it seems I’m on a plane every few days to Ingolstadt to preview a new car! It’s fantastic for us and 2005 will be big year for the A6 Avant and 2006 will see the Q7 and the A4 Cabriolet being redesigned, and there’s plenty more.
‘We’re going to see an extension of the current range, which I think has developed over the last few years tremendously. We can confidently go to fleet people and know that the cars we’re getting are exceptionally good in terms of quality and their appeal to the market.’
On top of product, and underpinning everything Audi does, is image. Short believes that the firm has been inconsistent in the UK over the past few years when it comes to presenting a corporate image, but steps are being taken to rectify that.
He said: ‘We want to develop the prestige image. We have a great image but can’t take that for granted. You see a number of brands that have a great image, but are happy to trade into that equity. Our view is we need to maintain that Vorsprung Durch Technik image and build on it, and not trade into it.
‘We have to have a mood and tone consistency. We see over the last year or two, particularly in press ads, that ours haven’t had the consistency of message around them.
‘With the upper and lower-medium sectors, we’ll see increasing dominance of premium brands and you’ll see a lot of the volume brands going to other new segments like MPVs and all sorts of lifestyle vehicles. The traditional sectors are being occupied by premium brands.
‘Businesses are becoming more discerning in terms of their purchases, they’re trying to keep hold of people, and company car policies dictate they are offered a wider, more prestigious range of vehicles, and so the perk car is making a comeback.’
Audi has restructured its business sales team to adapt to these changes, with four managers, a contract hire and leasing manager, a national business sales manager, specialist sales manager and business support and development manager. This will have the effect of forging closer links with the fleet industry, Short claims, and will also allow them to target smaller fleets of up to 100 cars.
He added: ‘This restructure allows us to concentrate on working with contract hire and leasing and previously we tended to do that through the business team but it was quite clear that we need to increase our focus on that, make sure we’re visiting them more recently, understand what they are doing, and we can’t do that on a two-monthly visiting cycle.
‘We want to be seeing people in the fleet industry so often that eventually they are turning us away! It’s better to be that way, than never seeing us at all.’