Audi plans big ad push for A4, Q7

Audi of America will spend more on marketing this year to support key model launches and maintain its record sales momentum.

Scott Keogh, president of Audi of America, declined to quantify the increase but said the luxury brand’s 2016 marketing budget is “tens of millions of more dollars” than its 2015 expenditures.

The additional budget will fund a fall advertising push for the redesigned A4 sedan and Q7 crossover after their initial launches in the first half of 2016, eschewing a “launch-and-leave” style of marketing support often seen in the industry, Keogh told Automotive News after Audi’s make meeting Friday.

Audi’s U.S. sales gained 4.6 percent through the first quarter while combined U.S. sales by luxury auto brands dipped 1 percent in the same period. Supporting demand for the A4 and Q7 is part of Audi’s broader plan to bolster dealer profits while maintaining sales momentum amid an overall tightening luxury auto market.

Audi dealers say their profits were dented last year amid the push to surpass 200,000 U.S. sales, and Keogh said restoring them is a key goal in 2016.

“It was a collective effort to see this thing through, and now in 2016, let’s start to earn some of that profitability back,” Keogh said.

It’s a start

Keogh says nearly twice as many Audi dealers hit their first-quarter sales targets than did during the prior year period and the A4 and Q7 are generating strong gross profits. Audi also revised its volume-based dealer bonus system in January, and the changes have been well received by dealers, Keogh said.

“If you put that bundle together — new products, driving demand with marketing plus the tweaked margin bonus system which we put in place in January of 2016 — the reaction has been quite good, but again, three months does not complete success,” Keogh said.

Audi topped 200,000 U.S. sales five years ahead of an internal 2020 target and just five years after selling 100,000 for the first time. After the meeting, dealers praised the volume milestone, and Audi’s strategy for achieving it.

“They have a plan and they are executing the plan,” said Steve Kalafer, owner of the 17-franchise Flemington Car & Truck Country, which includes an Audi dealership in Flemington, N.J. “Not only are the new products coming out, it’s a thoughtful mix of when they come out, how they come out and how they are going to take them to market.”

Astounding growth

Kalafer called Audi’s growth astounding, and said it demonstrated the capability of Audi’s dealer network.

“We know we can do 200,000, and now we’re going to grow in a realistic and planned manner,” he said.

Ralph Mauro, Audi’s dealer council chairman and owner of International Autos Group in West Allis, Wis., has said that Audi lowered its 2016 U.S. sales target to 210,000 from an earlier goal of 220,000, in part to aid dealer profits.

Eitel Dahm, owner Audi of Rochester Hills in Michigan, said 2016 sales targets weren’t discussed but new product launches will help Audi maintain its record pace. He also said Audi has a plan to support dealer profits along the way.

“The bottom line for us,” said Audi of America COO Mark Del Rosso, “is a dealer can never make enough money.”

Laurence Iliff contributed to this report.