Audi to focus on dealer profitability and an increased marketing spend

LAS VEGAS — Audi of America aims to boost sales and dealer profits and plans a major marketing boost to support key model launches in 2016.

President Scott Keogh told dealers at the make meeting that the 2016 marketing budget is “tens of millions of more dollars” than its 2015 expenditures. He did not give a specific amount.

The added budget will fund a fall advertising push for the newly redesigned A4 sedan and Q7 crossover. Keogh said the vehicles are in high demand and generating strong gross profits for dealers.

Audi dealers say their profits were dented last year amid the push to surpass 200,000 U.S. sales. Keogh said restoring profits 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,” he said.

The brand’s U.S. sales gained 4.6 percent in the first quarter while combined U.S. sales by luxury auto brands dipped 1 percent.

Keogh said nearly twice as many Audi dealers hit their first-quarter sales targets than in the same period the year before.

Audi also revised its volume-based dealer bonus system in January, and the changes have been well-received by dealers, he said.

“If you put that bundle together — new products driving demand with marketing plus the tweaked margin bonus system … the reaction has been quite good,” he said.

Audi topped 200,000 U.S. sales five years ahead of a 2020 target for achieving the goal — 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.”

Kalafer said Audi’s strong growth demonstrated the capability of the dealer network.

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

Eitel Dahm, owner Audi of Rochester Hills in Michigan, said new product launches will help Audi maintain its record pace. He also said Audi has a plan to support dealer profits along the way.

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