The Only Way is Up…

Under-investment, indecision, Dieselgate jail time – challenging times for Audi, as Georg Kacher explains

AT THE TIME of writing, Audi chairman Rupert Stadler is in Augsburg prison, Bavaria. He hasn’t been tried or charged with anything; he’s being investigated over allegations that he didn’t intervene when he heard about the use of defeat devices in 2015. The German authorities thought justice would be best served by having him out of the loop and unable to intervene in their ongoing investigations.

Around 20 other executives are under investigation by the German public prosecutor. In the US, former VW Group CEO Martin Winterkorn has been indicted with fraud and conspiracy.

As far as the VW Group is concerned, Stadler is ‘inactive’ but presumed innocent. For now, Abraham Schot’s in charge.

Stadler led Audi in its hugely profitable decade up to 2015, and helped it consolidate its position as a premium brand on a par with BMW and Mercedes. He is extremely well-connected within the company: he was chief of staff to Ferdinand Piëch when he was VW chairman and CEO. The group is owned by the Porsche and Piëch families and the state of Lower Saxony, represented respectively by Wolfgang Porsche, Michel Piëch and Stephan Weil. Union leader Bernd Osterloh is also influential.

audi the way is up 2How does Audi fit into the Dieselgate scandal?

Dieselgate relates to the discovery in 2015 by US investigators of software designed to fool diesel emissions tests, which investigators said had been going on since 2007, and involved some 11 million vehicles. Although the diesel engines in question were used by various VW Group brands, it’s believed the cheat software originated within Audi. The brand is under particularly keen scrutiny with the new WLTP emissions tests, resulting in some engines being unavailable to order.

And yet Audi’s hugely successful, isn’t it?

Yes – Audi’s the most profitable part of the VW Group, with sales at twice the volume they were in 2006. But the worry is that in today’s fast-moving market, you need to be running just to stand still. And Audi’s not running, so it’s storing up problems.

Critics argue that Stadler and his team have been too slow and too conservative for too long. The Q1 baby SUV, for instance, is still a couple of years away.

There’s uncertainty about the future of the open-top line-up (A3, A5, TT, R8), and there was too much dithering about the engineering to replace the current A4.

The other big problem, at least according to the more pessimistic observers, is that Audi’s future development is increasingly dependent on other parts of the VW Group – Audi has lost control of its engineering in exchange for efficiency- boosting synergies. That may make financial sense but it’s potentially detrimental to a brand with the tagline Vorsprung durch Technik . Audi’s treading water while Group rivals VW and Porsche explore new territories.

In addition to no fewer than 10 VWbadged EVs on the shared MEB platform due by 2025, Wolfsburg will also furnish Audi, Skoda and Seat with zero-emission know-how and hardware. By outsourcing engineering and assembly, all that’s left for Audi to do is design the bodies.

Audi has traditionally been free to go its own way with its biggest, most expensive cars. But within the group it’s now Porsche taking the lead; thus Audi will have to use Porsche architectures.

There’s always motorsport…

Well, there was. Audi had a brilliant run in endurance racing, dominating Le Mans with 13 wins over 17 years from 1999. But it’s no longer in the World Endurance Championship, having switched to Formula E as a symbolic and practical shift of priorities: it’s a less expensive, more directly relevant series.

While it’s involved in DTM, World
Rallycross and World Touring Cars, with mixed results, Audi Sport looks increasingly irrelevant as a sub-brand, lacking the innovation and excitement of BMW’s M division or AMG.

Will Audi’s electric cars fix all this?

Maybe, but loyal customers are having to wait for their electric Audi: innovative possibilities have been around within its R&D centres for years but production was repeatedly rejected, and the arrival of the Jaguar i-Pace has left Audi looking tardy.

This lack of fresh thinking is a shame because the guys from Ingolstadt used to lead the tech pack with their natural gas engines, C02-neutral hydrogen and synthetic fuels. Audi ran fuel cell prototypes around the same time as BMW and Merc, the A1 e-tron concept with Wankel range extender preceded the i3 by three years, while e-quattro (an electrically-powered rear axle) has been ready for production for years but remains undeployed.
Only now is the first e-tron Audi upon us. It, like the wider company, has its work cut out.

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