With the advent of autonomous cars, Audi's advertising trademark seems incredibly prescient. Vorsprung durch Technik (advancement through technology). Devised 30 years ago by advertising doyen Sir John Hegarty, the slogan applied to a Volkswagen offshoot struggling to give its four-rings the premium lustre of German rivals BMW and Mercedes.
Thanks to some iconic cars such as the Quattro and TT, along with volume sellers like the A4, Audi is now firmly established as a premium marque.
Today, with the imminent arrival of self-driving cars and the evolution from combustion engines towards electric battery power, technology is likely to prove the route to success – and survival – for car brands.
As an example of its "vorsprung", Audi Ireland managing director, Henning Dohrn, points to the firm's forthcoming foray into autonomous motoring. "Our autonomous driving system will be available with the new Audi A8 launched later this year. It means the car will control acceleration, steering and braking completely by itself up to 60 km/h."
The aim of the new system is to operate in congested motorway traffic without any input or monitoring from the driver. Like the latest Tesla models, the new A8 will also offer a separate park assist function, which will park the car automatically while the driver is outside the car, controlling it via an app on a smartphone.
“Then for fully electric cars . . . we will have three fully electric vehicles by 2020,” says Dohrn. The plan is for electric cars to make up 25 per cent of its sales by 2025. “This is really underlining the fact that electric cars are not concepts: they are coming now.”
The comparison to Tesla is perhaps apt, for much of the disruption in the motor industry looks set to be created by new-tech entrants. “There is an issue that some people regard the traditional firms in the industry, including Audi, as something like dinosaurs, and we see so many tech companies around us developing so quickly,” says Dohrn. So is Audi becoming a tech company? “I think the process of transformation has already begun.”
You don’t need to look to the future to find challenges for the brand in Ireland. Dohrn had no sooner landed in Dublin, than Britain was voting to exit the EU. The resulting fall of sterling has tempted buyers to look across the border to buy their premium cars. So far this year Audi cars are the third most popular used imported brand, with over 1,800 imports to date. “If you look at the import levels for last year, especially since I arrived in the second part of the year, of course you see the impact of the currency change on the back of Brexit.”
Most desired brand
He references a report in The Irish Times earlier this year, which showed Audi as the most desired car brand in a survey of nearly 4,000 motorists by insurance firm 123.ie. “It clearly shows there is a strong demand for Audis and people are looking around to see where they can afford to buy them.” His response to the rise in imports is a series of packages under Audi’s Approved Plus used car programme. “I think we have the right answers with good product, good offerings and financial packages.”
New car sales figures for the year to date show the firm has lost its lead in the premium sector to Mercedes for the first time in several years, with BMW trailing further behind. Will Audi give chase to its German rival? “Every brand has to take a decision how it is presenting itself on the marketplace,” he says. “We are saying that of course volume sales are a focus for us, but not at any price. We have our own volume targets, we are working through them but there is a hard focus on profitability and that means we will not deliver volume to any cost. Behind this is the same principle for the dealer network and even for the customers, who need to think about resale values.”
“The question is always balancing volume and profitability and I think we have one of the strongest – if not the strongest – attractive franchises in this country. Our main target is to hold this position.”
Could it be a consequence of another challenge facing the firm: the "dieselgate" emissions scandal? This centres on an admission by VW Group that it fitted cheat devices to 11 million of its diesel engine vehicles built between 2007 and 2015. It has resulted in the recall of 131,000 vehicles in Ireland, across the Audi, VW, Skoda and Seat brands. Audi is currently completing work on an estimated 350 recalls a week. Several Irish owners have also begun legal action.
According to Dohrn: “The first thing to note is that last year [with recalls under way and global media attention on the story] we managed to stay in top position despite the issue and it shows how strong the brand actually is in Ireland. Our task is to look to the future and to solve the problem together with our dealer network. We have a clear plan and we are working on a monthly basis to get through it.” He declines to go into any further details on the court action.
Glitzy showrooms
In the face of so many challenges – immediate and long-term – it seems a brave move for the firm and its franchised dealers to be investing millions in developing glitzy new high-tech showrooms. The most recent is a €20 million investment by retailer Charles Hurst, part of Lookers plc, in a new Audi "terminal" in Sandyford, south Dublin.
“I know it is a sign of the strong brand commitment by the dealers, but on the question as to whether the long-term investment makes sense at this time: in 2016 we closed the eighth year in a row as the number-one premium brand in Ireland. From the other side it’s an investor commitment and both together is what makes the brand in this country so successful. Every dealer at the moment is very happy that they did this investment and the business case is doing very well.”
Dohrn is well aware of the upheaval in Audi's Irish sales network over the last 10 years. In October 2008 the VW Group took back control of operations here from Motor Distributors Ltd, owned by the O'Flaherty family. Within two years Audi had terminated its dealer contracts as part of a plan to reduce sales and service outlets from 34 to 14. All new dealers were required to meet new levels of commitment to the brand. In many instances it involved significant capital investment. Audi currently has 11 full sales and service centres in the State.
The restructuring of the dealer network coincided with Dohrn joining Audi’s sales and distribution strategy division at its headquarters in Ingoldstadt. While he wasn’t directly involved in the Irish upheaval, his new role introduced him to the Irish market. “The steps taken were quite unique in the Audi world, taking the decision to say we are going to start again and rebuild the network and that’s where my role was focussed a little on Ireland.”
The changes have been substantial and painful at times, but they have paved the way for the aluminium honeycomb “terminals” dotted across the State.
And Dohrn has first-hand experience of dealer life. He did an internship in Cape Town, South Africa with a Mercedes-Benz outlet in 1999. After college he worked for a dealer group called Hofmann & Wittmann. "They sell about 3,500 new cars per year . . . their main focus brands are BMW, Porsche and Volkswagen, through their half-dozen outlets in the region. That's where I got a lot more detail and focus in working in the retail business." It just happens they are based in Ingoldstadt, the home city of Audi. Contact with staff working at head office opened the way for his current career path.
Back to the future he points to how technology is already starting to change the modern car showroom. We will see this in the new facility at Sandyford with its digital lounge.
Touchscreens
Dohrn also points to the firm’s Audi City programme, which has been piloted internationally. The focal point for these stores is a set of floor-to-ceiling “powerwall” screens linked to touchscreens, mounted on tables where cars can be configured. The cars can be spun around on the powerwalls, letting you peer inside, open the doors and even watch a video of your configured car driving on the road, complete with engine noise. The principle at Audi City is to inform, not necessarily to sell.
As to the potential for online sales replacing dealerships in the future, Dohrn says it's not that clear-cut. "I think there will always be a combination of both channels. Look, for example, at Amazon. Earlier everyone was telling us the future was ecommerce, but now they are heavily investing in bricks-and-mortar retail. With dealers, we will build the business together and I think with a strong dealer investment they will be our core pillar in the whole sales process."
“For the consumer, buying a premium car is about investing €50,000 or more, it’s not like buying a smartphone or tablet computer. I think people want to feel and experience the physical car a bit closer. That’s the reason why we still count on the dealer network and why we need it.”
Asked what will make the premium brand unique in the new age of autonomous motoring, Dohrn replies, as if on cue, with the trademark slogan: “Vorsprung durch Technik: simple as that.”
CV
Name: Henning Dohrn
Age: 39
Position: Managing director of Audi Ireland
Home: Booterstown, Co Dublin
Family: Married to Natalia, with two boys (aged 3 and 5)
Education: Economics degree and MBA from the University of Lüneburg
Something you might expect: He did an internship at a Mercedes-Benz dealership in Cape Town, South Africa in 1999
Something that might surprise: He did an internship with Sky in Germany when considering a career in TV before opting for the car industry
