luxury race

8/2/2019 Luxury Race

http://slidepdf.com/reader/full/luxury-race 1/11

HARALD HAMPRECHT

[email protected]

ike a bright white spaceship, 100 meters long, 70 meterswide and 12 meters high, Audi’s lavish new pavilion will beimpossible to miss at the 64th Frankfurt auto show. But that’sall part of the plan. The Volkswagen AG subsidiary investedmore than 10 million euros to secure its largest ever presence

– 7,000 square meters of exhibition space – atGermany’s biennial megashow.

Why spend so much just to show off 30 new cars?The answer is easy: Audi wants to out-do its rivals.

It won’t be easy. Daimler AG traditionally turns its standaloneFrankfurt exhibition hall into one of the world’s biggest Mercedes-Benz showrooms. There, Mercedes has 9,500 square meters of display space spread over three floors to exhibit 65 Mercedes and two May-bach models. But then there is BMW – tops in sheer space, with10,000 square meters of exhibition area, where it plans to show 56models.

Bigger, better, bolder.The epic clash between Germany’s premium-car heavyweights

always reaches a whole new level whenever the three meet at theworld’s biggest automotive circus. But something feels different –

something larger is at stake.With ambitious plans for model proliferation, higher volume tar-

gets and increased production, the three automakers are laser-focused on topping each other.

But they also face a growing number of new threats.

Tight sales raceThe race to be this year’s global leader in premium-car sales is as

tight as ever with Audi poised to pass Mercedes in full-year sales forthe first time. If that happens, Mercedes will drop to No. 3 in theglobal premium brand ranking. It has been No. 2 since beingknocked off the top spot by BMW in 2005.

All three brands increased global unit sales in the first half of the year. Mercedes brand’s sales were up 10 percent to 610,531; Audiended the half with an 18 percent gain to 652,970 units; and BMWbrand was No. 1 with an 18 percent rise to 689,861.

Daimler CEO Dieter Zetsche is not happy about Mercedes’ decline.He has vowed to be more aggressive.

“Some of our competitors are now growing faster and more prof-itably than we are. We can’t be content to be in a solid second oreven third place: We are Daimler. We should be far ahead of thepack! And if that requires something that we don’t currently have,

Daimler’s Zetsche wants to return Mercedes to No. 1

in global premium car sales; BMW and Audi have other plans

18 ANE EXECUTIVE EDITION SEPTEMBER 2011

L

COVER STORY

Rupert Stadler Audi

Norbert ReithoferBMW

Dieter ZetscheDaimler

AUTOMOTIVE NEWS EUROPE COVER STORY



then we’ll identify and develop it,” Zetsche said in a letter to Daimleremployees in July.

When asked about letter, Zetsche told Automotive News Europe (seepage 24): “Our goal is to be No. 1 in profitability and sales in the pre-mium segment.”

And he wants that to happen by 2020 – at the latest, sources said.Zetsche’s rivals are equally committed.“We are clearly looking forward rather than over our shoulder,”

BMW sales boss Ian Robertson told Automotive News Europe . “Wehave the clear objective to stay the most successful premium manu-facturer.”

Audi CEO Rupert Stadler also has set his sights on the No. 1 spot.All three companies have ambitious financial targets. BMW aims

for a profit margin of 8 to 10 percent, as does Audi. Mercedes’ profit-margin goal remains 10 percent, a target set in early 2008 as part of Daimler’s so-called “Go for 10” strategy. The carmaker also said atthe time it wanted to be world champion in 10 disciplines includingsecurity, comfort, design, quality, service, eco-friendliness and effi-ciency. The wide-ranging goal has drawn criticism.

“The Mercedes brand sways between too wide of a spread of values.And for too long it has neglected its claim as the No. 1 premium-carranking,” said Karl-Heinz Kalbfell, a 36-year industry veteran whoworked with BMW, Mini, Rolls-Royce, Alfa Romeo and Maseratibefore becoming a consultant for brands such as Lotus.

The next big year: 2020Zetsche declined to reveal volume targets of his Mercedes’ attack

plan. “The next step is to support our claims with goals for volume,”the CEO said. “We will talk more precisely about our milestoneslater.”

The year 2020 is also important for BMW.By then, BMW plans to sell 2 million BMW,

Mini and Rolls-Royce brand cars annually,according to its Strategy Number ONE planlaunched in 2007.

Media reports say the automaker is workingon an even more ambitious plan that has ittopping 2 million sales in 2016 and achieving avolume as high as 2.6 million by 2020. Thiswould include some 400,000 Minis and multi-

ple-thousand Rolls-Royce sales, according tothe reports.

Robertson admitted that something new isbeing devised. “We are currently reviewing ourStrategy Number ONE objectives,” he said. “Weare asking ourselves: What do we now need toensure the next step? We will crystallize some of that in the near future and work out more con-crete definitions.”

Audi CEO Stadler also is aiming higher. He recently announcedthat Audi plans to sell 2 million units annually by 2020, adding thatthe automaker will reach 1.5 million sales by 2014, which is one yearahead of schedule.

The real goal is even more ambitious. Audi purchasing boss Ulf Berkenhagen recently told the company’s 200 most important suppli-ers that the automaker wants to push its 2012 sales to more than1.6 million units – almost double its total volume in 2005. For 2013,the outlook is 1.7 million. The sources added that Berkenhagen askedthe suppliers for a buffer of an additional 15 percent above the 1.7 mil-lion.

Audi declined to comment about the volume number.But even if it comes up short of those goals, one former auto exec-

utive is impressed with Audi’s quick rise.“Twenty years ago, Audi wouldn’t have even made the list of

Prestige Three,” former General Motors product czar Bob Lutz toldAutomotive News Europe .

To make the big gains in unit sales, the three automakers will beexpanding their lineups.

Said Zetsche: “We will introduce a wide variety of additions to ourproduct portfolio. By 2020, we will bring out at least 10 models, likethe new compacts and the CLS Shooting Brake.”

The new compacts that Zetsche mentions are the second-genera-tion A- and B-class models that will be underpinned by a new plat-

form called MFA (Mercedes Front-wheel-drive Architecture). Thecurrent two-car lineup will grow to five to include a coupe to rivalthe BMW 1-series coupe, an SUV aimed at the BMW X1 and AudiQ3 and a shooting brake (a low-slung sporty station wagon). Withthe MFA architecture, Daimler hopes to double sales of its entry-level

models to 400,000 in the mid-term.Other planned additions to the Mercedes

lineup include new variants of the next-genera-tion C class such as a cabriolet, due in 2015, aswell as a coupe version of the M-class SUVcalled the MLC that could arrive in 2015.

Coming in early 2013 is a new generation of the S-class flagship. The current S class is theoldest model among the German rivals in theupper-premium segment. That usually meansdeclining sales, but with a global volume of

66,500 units last year, the S class outsold therecently renewed BMW 7 series (65,800) andAudi A8 (16,700).

BMW makes a big switch

BMW also has big plans to expand its lineup.Sources tell Automotive News Europe that the

automaker soon will add the 2-series cabrioletand coupe as successors to the 1-series convertible and coupe. A sim-ilar strategy is planned for the 3-series model line, where the next-generation coupe and convertible variants will become the 4-seriesline.

“A lot of additional models are to come,” sales boss Robertsonadded.

According to company sources, those include the so-called 6-series(four-door) Gran Coupe, which is due in 2012, and a GT version of the 3 series planned for 2013.

The biggest contributor to BMW’s future portfolio will be its so-called Untere Fahrzeugklasse or UKL architecture. The German namemeans “lower vehicle class” in English.

“With the UKL alone, there will be six to nine new models in thecoming years,” Robertson said without giving more details.

The front-wheel-drive architecture is for smaller BMW and Minibrand models, starting with the next-generation Mini hatchback duein 2013. Other UKL derivatives include a small minivan and sporty compact wagon, sources say.

Due in 2017, the first BMW to use the architecture will be the next-


SEPTEMBER 2011 19ANE EXECUTIVE EDITION

c c“We are clearlylooking forwardrather than over ourshoulder. We havethe clear objectiveto stay the mostsuccessful premiummanufacturer.”

BMW SALES BOSS

IAN ROBERTSON

TITANS S CONTINUED ON PAGE 20

Source: IHS Automotive

Audi is poised to pass Mercedes this year, but the

lead won’t last. Here’s a look at the global

sales history and outlook for German

premium brand sales.

GROWING FAST

U n i t s

i n

t h o u s a n d s



generation 1 series, which will become thebrand’s first front-wheel-drive model.

It’s a change that worried former BMWexecutive Kalbfell.

“It is a clear risk that BMW is trying toexpand the brand to smaller segmentsinstead of leaving that territory to Mini,” hesaid. “It is a threat that they want to give upthe unique sell position of rear-wheel drive.That will be a stress-test for the relationshipwith core customers.”

Robertson said UKL models are BMW’sanswer to growing demand for smaller-sizedpremium models, especially among cus-tomers in fast-growing, densely populatedmarkets.

Meanwhile, Audi CEO Stadler said hewants to increase the number of productsoffered to 50 from 42 by 2020. If that num-ber sounds high it’s because of the way Audicounts its models. If you subtract variantssuch as the high-performance R versions of its traditional models, Audi has 21 models

today, not 42.True new additions planned for the modelfamily include the A9 Coupe (2015), whichwill compete against the Mercedes CL, andthe Q6 (2014), which will target the BMW X6.

Output increasesThe addition of the new cars is forcing the

German automakers to look for ways toboost their production by either expandingexisting plants or building new ones.

A key part of Zetsche’s growth plan isDaimler’s new plant in Kecskemet, Hungary,which will have a capacity of 100,000 unitswhen it starts producing the next A- and B-class cars in early 2012.

Daimler sources say Zetsche is looking atways to expand the Hungary factory andwould like to add production of the C-classcoupe and the so-called MLC derivative of theM-class SUV to Mercedes’ U.S. plant in thesecond half of the decade. The U.S. plant cur-rently makes the GL-, M- and R-class SUVs.

And Daimler is mulling an additional plantin China. When asked about expansion in theworld’s largest auto market Zetsche said: “Weare continually in growth mode. In China,there are more than 120 billionaires andabout 670,000 millionaires. Until they are alldriving the S class, we still have things to do.”

Audi is the best positioned premium brandin China, which will be the automaker’s sin-

gle-biggest sales market as of this year. “Wehave to expand our current capacity of 300,000 units in the next few years,” AudiCEO Stadler said. “It took Audi 22 years tosell the first 1 million vehicles. We’ll sell thesecond million in just three years, between2011 and 2013.”

Audi, like Daimler, has a plant in Hungary.The Gyor factory, which was opened in 1993,is about to undergo a big improvement.“Starting in 2013, we will have a capacity of 125,000 cars in Gyor,” said Stadler.

Audi’s biggest weakness when comparedwith its German rivals is that it is the only one without a factory in North America.This disadvantage is one reason why Audi

sells about one-third as many cars in theUnited States as the BMW brand, which ison track to pass Lexus to become that mar-ket’s premium-car sales leader for the firsttime in 12 years.

Key partnersAudi’s biggest competitive advantage in the

race to be global premium-sales champ isthat it is part of the massive VW Group.Audi is getting Q3s made at sister brandSeat’s underutilized plant in Martorell,Spain, while Skoda’s factory in India alsoassembles Audis for the local market.

A look at Audi’s structure (see box above)shows it has the fewest employees and plantsof the three German luxury brands, but asindustry veteran Lutz said, it can do morewith less because it is “able to dilute a lot of the enormous basic development costs overthe worldwide volume of VW, Skoda andSeat.”

While being part of a mega organizationhas worked for Audi, attempts by BMW andDaimler to grow through acquisitions failedmiserably.

BMW’s bid to integrate the UK-basedRover group was a financial disaster. The

same can be said for the so-called “marriagein heaven” that Zetsche’s predecessor,Juergen Schrempp, arranged betweenDaimler and Chrysler Group. That union

failed as did Daimler’s stake-holdings inMitsubishi Motors Corp. and HyundaiMotor Co.

Today, BMW and Daimler are more inter-ested in strategic partnerships. They cooper-ate with each other – without major success– on the joint purchase of some parts. Eachbrand also has a partnership with a Frenchautomaker. BMW’s alliance is withPSA/Peugeot-Citroen and Daimler hasteamed with Renault (see pages 24, 28).

The threats

But risks remain.“The long-term enemy is over-supply,”

said Lutz, who has held key jobs at GM,Ford, Chrysler and BMW. “When everyonehas a German prestige car on a $350-a-month lease, uniqueness, desirability, ownerpride and resale values go down.”

BMW marketing boss Robertson seesthings differently.

“The global car market this year will bearound 70 million vehicles and the premiumsegment will be somewhere around 5 millionvehicles, so it is still a small percentage of theoverall car market,” he said.



TITANS S CONTINUED FROM PAGE 19

How the 3 premium brands compare on key metrics

FIERCE COMPETITION

Unit sales 2010

Europe (excl. Russia)

ChinaU.S.

Unit sales H1 2011

Europe (excl. Russia)

China

U.S.

Dealers worldwide

Europe

China

U.S.

Profit margin H1 2011

Model variants (body styles)

Production plants (passenger cars)

CKD plants

Employees

R&D spending as % of total sales

Key partner

Partner for carbon fiber

Audi

1,092,411

634,549

227,938101,629

652,970

365,641

140,699

55,909

2,500

1,679

191

285

11.8%

21

4*

1**

46,544

7.1%

VW Group

Voith

BMW brand

1,222,280

622,514

168,998265,757

689,861

344,057

121,614

143,521

3,100

about 2,000

230

450

14.4%

19

7

7

96,943***

4.6 %

PSA

SGL Group

Mercedes brand

1,167,700

604,535

148,400216,400

710,922

307,770

92,174

110,926

5,000

1,800

>160

350

10.0%

23

6

6

96,281***

>5.5%

Renault

Toray

* Audi production plants excluding contract manufacturing by Seat in Martorell and by VW in Bratislava

** Audi CKD plants exlcuding Skoda factory in India***Figures for BMW Group and Mercedes Benz Cars (incl. Maybach, Smart)

Source: JATO Dynamics, companies

TITANS S CONTINUED ON PAGE 22



www.raytheon.com | Keyword: Auto-Training

INNOVATION IN ALL DOMAINS

Follow us on:

© 2011 Raytheon Company. All rights reserved.“Customer Success Is Our Mission” is a registered trademark of Raytheon Company.

Launching new products, delivering sales and support

excellence — they drive business success. So Raytheon

Professional Services helps automotive retail networks

design, execute and manage training solutions that enable

game-changing efficiencies. Our programmes are available

anytime, anywhere — for any type of vehicle.

ACCELERATINGORGANISATIONSTO PEAK PERFORMANCE.

AUTOMOTIVE TRAINING SOLUTIONS

To learn more, contact us at +49 (0) 6142 917 101or [email protected]



A6

RS3 A6 Avant

Q5 hybrid

Q3

A5 face-lift

A1 5-door

A3 A4 Avant face-lift

A6 hybrid

A8 hybrid

R8 E-tron

S1, S6, S7, S8

Q5 face-lift

A3 Sportback

A3 cabrio TT

A1 face-lift

A3 sporty sedan A4

Q7

Q6

BMW 6-series cabrio

BMW 1-series cabrio,

coupe face-lift

BMW 1-series M coupe

BMW 1-series 5-door

BMW 6-series coupeBMW M5

X6 face-lift

New 3-series sedan

New 6-series Gran Coupe

M6 cabrio

5series hybrid

M6 CoupeNew 1-series 3-door

New 3-series Touring

New 3-series hybrid

X1 face-lift

Z4 face-lift

7-series face-lift

New 4-series coupe

New 4-series cabrio

New 2-series coupe5-series GT face-lift

New 3-series GT

BMW i3

New X5

BMW i8

1-series 5-door hybrid

New 2-series cabrio

First UKL model

(small minivan)

X3 minor face-lift

C-class face-lfit

C-class Coupe

SLK

M class

B class

SLS Roadster

New SL

CLS Shooting Brake

A class

New GL

GLK face-lift

G-class face-lift

E-class hybrid

M-class hybrid

New S class

SLS AMG E-Cell

New CLC

(A-class coupe)

S-class hybrid

E-class major facelift

B-class F-Cell

GLC (A-class SUV)

S-class plug-in hybrid

New CL

New CLC

Shooting Brake

New C class

New C-class F-Cell

M-class face-lift

2011



2012 2013 2014

PRODUCT OFFENSIVES

EUROPEAN LAUNCH DATES

M M M M

For premium brands, it also will becomeharder to stand out from fast-improving vol-ume brands such as Volkswagen and Ford.

Said Lutz: “The German premiums are fac-ing the problem of technical differentiationfrom increasingly excellent volume producers,(that are) using the same premium chassisand engine solutions.”

Some experts also fear that the German pre-mium brands risk diluting their image andmargins by dropping down into volumes seg-ments. “You cannot stretch premium endless-ly – neither in terms of segments nor in termsof volumes,” Kalbfell said. “The covetousnessof the brand, its design and service at the deal-erships, will determine who will be the premi-um leader of the future.”

This year, the Audi A1 will account forabout 10 percent of Audi total’s sales. “If youtake the A3 into account, 25 percent of allsales are with small and compact cars. Thiswill dilute the profit,” said FerdinandDudenhoeffer, who heads Duisburg-Essen

University’s center for automotive research.Kalbfell also warned against trying to play

follow the leader. “Audi has a profile of acopier – a successful one, but still a copycat,”he said. “They have to develop their own pro-file and get out of the slipstream of Mercedesand BMW.”

Dudenhoeffer supports that thesis: “Audihas not managed to present real innovationsin recent years, but lost its technology advan-tage promised in their marketing slogan

Vorsprung durch Technik . This becomes obvi-ous when you look at electric mobility or carsharing solutions.”

The rest of the pack What risks do Audi, Mercedes and BMW face

from outside Germany? Not many, as globalsales volumes are small at competitors based inthe United States, Japan, Sweden and the UK.

Henner Lehne, global director at marketresearch firm IHS Automotive, said theGerman premium brands will account fortwo-thirds of all global premium-car sales this

year – and this won’t change in the mid-term.“The race for premium-market leadership willonly be decided among the Germans,” Lehnesaid.

Combined sales of Japan’s premium brands(Lexus, Infiniti, Acura) will not even add upto half of the 2011 Audi sales, according to anIHS forecast. The most successful non-German brand is expected to be Volvo, withestimated 2011 global sales of 424,500 units.Other competitors, with estimated 2011 sales,

include: Lexus (385,400), Cadillac (200,900),Acura (150,000), Alfa Romeo (143,500),Infiniti (137,000), Porsche (118,500) andJaguar (52,600).

As prestige is strongly connected to prof-itability, Daimler’s Zetsche indicates that a 10percent margin might not be the end goal forhis company. “If greater potential in theindustry should emerge, we will develop it,”Zetsche said, with a wide grin on his face.

His smile must have frozen after he heardthat Stuttgart neighbor Porsche recently achieved a profit margin of 21 percent. I

TITANS S CONTINUED FROM PAGE 20



JUST THINK:

AUTOMATICEMERGENCY BRAKING

FOR EVERY CAR

IN EUROPE.Advanced technologies are raising the intelligence of safety, always

there and always aware. Cognitive Safety Systems from TRW can

help protect more drivers, passengers and pedestrians worldwide.

TRW’s Advanced Thinking – the safety everyone deserves.

ADVANCED THINKING / SMART THINKING / GREEN THINKING

http://cognitivesafetysystems.trw.com

© T R W A

u t o m o t i v e 2 0 1 1



&

year before Dieter Zetsche took overas Daimler CEO, the company’sMercedes-Benz brand lost its place as

the world’s top-selling premium automakerto BMW. Zetsche wants the title back. The35-year Daimler veteran talked about how heis going to help Mercedes return to No. 1when he met with Automotive News Europe

Editor-in-Chief Harald Hamprecht atDaimler’s headquarters in Stuttgart.

In a letter to your employees, you

announced that you wanted to

become No. 1 in the premium seg-

ment again. What is your plan of

attack?

In recent years, we have already created thebasic conditions for sustained success. Weagain have top quality and a clear, appealingdesign. We have expanded our traditionalstrengths, including safety. We are reducingour CO2 emissions more quickly than ourdirect competition and we are improving ourcustomer relationships more vigorously than

ever before. And this is all related toimprovements in efficiency.

And looking forward?

We will introduce a wide variety of addi-tions to our product portfolio. We also willhave a greater presence in various marketsand grow faster than the competition withthis overall positioning. So we are movinginto the lead in sales and are no longer ahead just in brand value.

What about in profitability?

That is naturally part of it. But due to theparticular cycle, you don’t end up at thesame level each quarter and year.

BMW had a profit margin of 13.3

percent in the first half, Audi

11.8 percent and you 10.0 percent.

In 2011 and 2012, many of our productsare in the last third of their life cycles.The situation is just the reverse at BMW.That’s why it is a snapshot. But I am con-vinced we can lead right through the cyclein profitability compared with our twocompetitors.

When do you plan to be No. 1 and

what figure are you targeting?

Our goal is to be No. 1 in profitability andsales in the premium segment. The objectiveis clear, and so is our commitment. Concretemeasures are next. We will talk more precise-ly about our milestones later.

How are your profitability goalsshaping up?

Even before the economic crisis of 2008,we set a profit margin of 10 percent as ourgoal at Mercedes-Benz Cars, as part of our“Go for 10” program. This still applies. Wereached this level for the first half of the year.And we don’t have to hide from that. If greater potential in the industry shouldemerge, we will develop it.

What is your short-term sales goal?

This year, we expect sales of more than1.35 million for Mercedes Benz Cars.

How many units does Smart account

for?Last year, the figure was 97,500 Smarts. In

2011, we are aiming for 100,000.

For the entire year, that means

you could still stay ahead of Audi,

which targets sales of more than

1.2 million.

In recent years, we invariably sold fewervehicles than Audi in the first four months of the year. This year, this was the case for sixmonths. But we were still ahead for all of 2010. It is certainly a bit tighter this year. ButI am confident.

Will you add staff?

At the end of 2010, Daimler had 260,000employees worldwide. The figure was164,000 in Germany. This year, we will makemore than 10,000 new hires globally, 4,000of them in Germany. In the future, it’s clearthat we will predominantly see growth in thegrowth markets.

In the compact segment, you want

to expand the A- and B-class family

to five models. Do you still want to

double volumes there?

We are striving for a considerable increasein volumes. That’s why we have made invest-

ments in the Kecskemet (Hungary) plant, inaddition to our compact-class factory inRastatt (Germany). The Kecskemet facility will have a capacity of 100,000 vehicles a year. In the past, we sold 270,000 A- and B-class units at our peak. Time will tell wherewe will be with the full availability of all ourmodels.

You have 23 car body variations,

compared with 21 at Audi and 19 at

BMW.

As a whole, we coincide in many areas.Today the biggest difference between us andAudi is that we have no representation in theA1 segment.

Audi intends to hit 120,000 units a

year in the segment.

That also explains the volume differencecompared with our portfolio. The situationis similar at BMW with its X1.

You will launch an X1 competitor.

Will you also launch an A1 rival?

If you only focus on sales figures, it is aninteresting segment. If you look at profitmargins, it is significantly less attractive. So

DR. Z’SATTACK PLANDaimler CEO determined to push Mercedesback to No. 1 among premium automakers

D I E T E R Z E T S C H E

MEET THE BOSS

Dieter Zetsche, 58, has been Daimler AG CEO and

head of the Mercedes-Benz Cars division since

2006. The German, who was born in Istanbul,

Turkey, joined the company in 1976 as part of the

research division. He has held key posts in just

about every Daimler division including sales, engi-neering and commercial vehicles. Before being pro-

moted to the company’s top job, Zetsche was CEO

of Chrysler Group, where he gained the nickname

“Dr. Z” following a successful ad campaign. Less

than a year after leaving the U.S. automaker’s

Auburn Hills, Michigan, headquarters, Zetsche was

part of the team that sold Chrysler to private equity

firm Cerberus, a move that quickly got Daimler back

on track financially. He has a doctorate in engineer-

ing from the University of Paderborn, Germany.

G



A



far we have no plans for it. But we still have afew ideas for new models. We will use them toclose gaps and forge ahead into completely new segments. We will employ these newbuilding blocks in our attack.

What is the total number of new

products we can expect?

By 2020, we will bring out at least 10 com-plementary models, like the new compactmodels and the CLS Shooting Break. Thismay happen even faster.

But expanding the portfolio is an

expensive proposition.

Initially, the prerequisite for a cost-effectiveexpansion of our portfolio at comparably littleexpense and complexity is a disciplined archi-tecture strategy, which permits the maximummodularization and flexibility in our twomain architectures.

Just two?

Yes, with just a few exceptions. I am mainly talking about the new front-wheel-drive archi-tecture and the rear-wheel-drive architecturefor the C class and E class and its derivatives.The S class is not an integral component in thisregard. We are naturally looking for the great-est possible use of common parts in sports carsand SUVs, something that we will increaseeven more in the future. This is accom-panied by Daimler’s substantial invest-ments.

Which are?

Ten billion euros in 2011 and 2012,in research and development to renewand replenish our products as well as

promote our two major visions:emission- and accident-freedriving. And our plantinvestments are of aboutthe same magnitude overa similar time frame.

How is the future of

the Maybach shap-

ing up? Will there

be a partnership

with Aston Martin?

We have made nodecision on Maybach.The analyses are on-going. Our thinking is

moving in variousdirections and we aresticking with it.

What is going

on with the

expansion of

the Smart fami-

ly? According to

internal planning,

a sales increase to

150,000 units by

2015 and 200,000 by 2020 is

allegedly possible?

We have never made statements about thesespecific volumes. It’s true that we’ll bring outthe new Smart four-seater in 2014. Wehaven’t decided whether there will be moremodels. We are focusing on the two- andfour-seat models in cooperation with Renault.

Renault has withdrawn from the

alliance’s two-seater?

It’s true that we are planning a commonarchitecture. A possible two-seater fromRenault was never relevant to the economicfeasibility of the overall project. Our thirdgeneration is and will be profitable.

And you are planning a model based

on the Renault Kangoo – internally

known as VS10 – starting in 2012?

Yes, that is a very interesting project. Asmall city delivery vehicle, primarily for com-mercial use, is being developed on this basis.It is being optimized for longevity, quality andappearance and is closing a gap in our lightcommercial vehicle product line.

Do you plan to make your MFA

platform available to Infiniti?

There has been no decision on this. There isrecognition that there is practically no

substitution between Infiniti andMercedes. The research has shownthat the Lexus is rather seen as analternative to Mercedes in somemarkets such as the U.S., whereasInfiniti tends to be a competitor to

BMW.

Who do you see as a

competitor in the

premium segment

globally?

Twenty years ago,we had Cadillac,Lincoln, Jaguar,and Volvo as com-petitors,at least in marketslike the U.S. Thishaslately beenreduced to Lexus,BMW and Audi –a great success

story for all of theGerman brands.

You plan to start

building the

C class in your

U.S. plant in

2014. Which

models?

It’s well-known thatwe are investing $2 bil-lion on the factory

expansion. For the C class, we are initially limiting ourselves to the C sedan. America isno market for station wagons. There has beenno decision on other models, like the coupe.

What are your plans for China?

Over the last few years, we have been catch-ing up very quickly in China, after entering

the market relatively late with our own pro-duction. Starting this year, we are buildingthe GLK and then gradually the three modellines of the new generation of the Mercedes-Benz compact car locally. The existing assem-bly capacity for the C class and the E-classlong-wheelbase version will be expanded fur-ther from the current 80,000 vehicles basedon market demand. In 2015, we expect salesof more than 300,000 units in China, of which two-thirds, or 200,000, will be pro-duced locally.

Do you need a second plant there?

We are continually in growth mode. But wecan’t talk about the next steps today. Onething is clear: In China, there are more than120 billionaires and about 670,000 million-aires. Until they are all driving the S class, westill have things to do.

A look at your sales structure reveals

that you do half of your business in

western Europe. Will you lower that

dependence in the future?

We will continue to grow very dispropor-tionately in growth markets outside of Europe. Not just in the U.S. and in China. Nomatter whether it’s India, Korea or Turkey,we will exploit the potential wherever there isgrowth.

With your new plant in Hungary, you

now have six main production loca-

tions for cars worldwide. How many

more will you need to support the

growth you are targeting by 2020?

It’s too early for concrete statements, but beassured – the planning is on-going.

In the face of this global trend in the

low-cost and volume segments,

doesn’t it make sense to incorporate

a high-volume brand once again,

even if deals with Chrysler and

Mitsubishi failed?

No, we are a premium manufacturer. On

specific issues, where volume plays a majorrole, cooperative projects like the one withRenault are a good solution. Moreover, we donot plan to become involved in the high-vol-ume segment ourselves.

Your contract runs until 2013, at which point you’ll be 60. Do you

plan to retire or remain CEO?That is a question that you have to address a

year before the expiration of the contract, notearlier.I


SEPTEMBER 2011 25ANE EXECUTIVE EDITION

For the complete Dieter Zetsche interview go to europe.autonews.com/zetscheexecedition



&

udi has a chance to overtakeMercedes-Benz this year for the first

time with new-car sales of “morethan 1.2 million” – while Mercedes is aimingfor about 1.25 million sales. VW’s premiumbrand is posting record sales and profits,helped by a big product offensive and growthin China and the United States. Audi CEORupert Stadler still sees lucrative niches thatthe brand could fill. The Audi range couldgrow to 50 models, Stadler says. But the

company’s ambitions don’t stop there. Itsgoal is annual sales of 2 million cars by 2020and the brand also aims to be the premiumleader in sustainability and innovation.Stadler outlined Audi’s ambitions toAutomotive News Europe Editor-in-Chief Harald Hamprecht.

What level of growth do you see?

Over the next 15 years, we see growth of about 60 percent in overall passenger cardemand. The premium market is evenexpected to grow at a proportionately higherrate. Encouraged by our successful courseover the past few years, we want to sell morethan 2 million cars a year by 2020.

You could buy market share with

high rebates.

Right. A straw fire only creates heat for ashort time and afterward you freeze. That isnot our philosophy. So the core of ourapproach is sustained, quality growth in thefuture too. We have already come a long way in recent years. Our profit margin never fellbelow 5.4 percent even during the financialcrisis. Our employees know that this stability in the face of crises is a precondition forsecure employment.

In 2010, you achieved a pre-tax

profit margin of 10.3 percent and asa cash cow delivered 3.34 billion

euros of the 7.1 billion euro profit of

the entire VW Group and its 10

brands.

I don’t like the term “cash cow.” Let’s putit this way: We want to contribute to the suc-cess of the entire company.

Can you match your 10.6 percent

profit from the first quarter through

all of 2011 or even increase it?

The year still has a few months to go, andwe always tend to be rather careful with ourpredictions. But we have set a clear corridorfor our objectives. Of course, we will behappy if the numbers turn out to be a bithigher, as they were between January andJune.

What is the planned profit margin

for 2020?

We are planning on a profit margin

between 8 and 10 percent.

Your sales goal for this year is 1.2

million units. Might we even expect

a further increase?

We will clear the bar of 1.2 million salescleanly, perhaps with some air in between.But let’s look beyond 2011. With the newgeneration of the A6 and the Audi Q3, whichreaches dealers this autumn, we are creatingthe conditions for a successful 2012 whenthese models will be available over an entire12-month period for the first time.

What is the goal for 2012?

To continue to grow. Ultimately we have 2million in our sights and want to continually up the ante year after year.

When will you reach the original goal

of annual unit sales of 1.5 million?

As early as 2014 according to our esti-mates. But we have nothing against it hap-pening earlier.

Will you overtake Mercedes and take

the No. 2 spot for the first time,

moving closer to BMW, the best-sell-

ing premium brand globally?

As far as we are concerned, this isn’t a racefor volume. It’s possible that we could over-

take one or the other of them.

How is the expansion of the model

portfolio shaping up overall?

We still see a few lucrative niches in themarkets, which is why we continue toexpand. The Audi model family couldabsolutely grow to 50 members one day.

When is the A1 Cabrio coming?

This year we want to sell 120,000 units of the three-door A1. Recall that the figure was

just 80,000 units in our original planning.We will introduce the A1 in China at the endof 2011 or beginning of 2012. Then a four-door A1 will come at some point. So we haveenough to do. The convertible is a topic forthe second generation.

Is an A9 Coupe coming after the A5

and A7 to compete with the

Mercedes CL?

We are giving a great deal of thought tothis. But there still haven’t been any deci-sions.

What is happening in the Q family?

Will there be a small Q1?

I have also read that a Q4 and a Q6 wouldbe theoretically possible. But here we aremoving too far into the realm of speculation.

How is your cooperation with

Porsche going? Where are synergies

occurring and how are you prevent-

ing cannibalization?

Each brand has its own product responsi-bility and authority over development. At thesame time, we turn to modular structures.There are precisely established responsibili-ties for this. The genetics of the respectivebrands remains unique and protected by thissystem of responsibilities. I

MAKING GAINS Audi has the chance to overtake Mercedesthis year in sales and has high profit goals

R U P E R T S T A D L E R

MEET THE BOSS

Unlike most CEOs of German car companies,

Rupert Stadler does not have a background in engi-

neering, having instead studied business manage-

ment. But since becoming Audi CEO in 2007, the

native of Bavaria, Germany, has presided over a

period when the Volkswagen premium unit hasreported record sales and profits and launched a big

product offensive. Stadler, 48, joined Audi in 1990

with responsibility for controlling tasks in sales and

marketing. In 1997, he became head of the board of

management’s office for VW Group, adding the

additional role as head of group product planning in

2002. A year later he was appointed Audi’s finance

boss, a job he held until he succeeded Martin

Winterkorn as CEO four years later.

G



A

S For the complete Rupert Stadler interview go to europe.autonews.com/stadlerexecedition S



www.borgwarner.com feel good about driving

Weniger Emissionen Mehr Leistung

Mehr Leistung bei weniger Verbrauch und CO2 – BorgWarner macht’s möglich. Als führender Automobilzulieferer

entwickeln wir für fast alle Fahrzeughersteller der Welt zukunftsweisende Antriebs lösungen: vom Turbolader über

Zündungstechnik und Ventilsteuerung bis zur Abgasrückführung, vom Doppelkupplungsgetriebe bis zum Allradantrieb

und vom Dieselschnellstart- bis zum Kühlsystem. Schon heute stecken unsere Produkte weltweit in jedem zweiten

PKW und Nutzfahrzeug – und tragen entscheidend dazu bei, sowohl Umwelt verträglichkeit als auch Fahrkomfort

und Zuverlässigkeit zu verbessern.



&

MW Group is seeing positive resultsfrom the strategic realignment it initi-ated in late 2007. In the first half of

2011, the Bavarian premium carmaker post-ed a profit margin of 13.3 percent, comparedwith an 11.8 percent margin at Audi and10.0 percent at Daimler.

The automaker’s new-car sales were up

19.7 percent to 833,366 units in the half,causing BMW to revise upward its full-yearforecast. The company aims to sell morethan 1.6 million BMW, Mini and Rolls-Royce models in 2011, which would be anew record.

BMW Chief Financial Officer FriedrichEichiner expects unit sales and profits tokeep improving. He explained how thiswill happen in an interview withAutomotive News Europe Editor-in-Chief Harald Hamprecht.

BMW is the No. 1 premium carmak-

er based on unit sales and profit

margin. Can you defend this position

until 2020?Yes, I am firmly convinced that we will

remain No. 1 in the premium segmentworldwide.

What makes you so sure?

We have the strongest reputation in thepremium segment worldwide. As early as2007, we set the right course for success withour strategic realignment. You can see that inour financial results as well. For all of 2011,we are expecting a sales increase to morethan 1.6 million vehicles. That representsgrowth of more than 10 percent comparedwith last year. And we are striving for anEBIT margin of more than 10 percent in theautomotive segment for 2011.

How will these figures develop over

time?

In the ensuing years, we want to reach ourgoal of a sustained profit margin of 8 percentto 10 percent within the group, assumingthat the economic trend will basically benormal. In addition, we are on the brink of taking electro-mobility to a new level. Plus,the development of a front-wheel-drive

architecture across brands in the premiumsmall-car segment will help us improve ourprofitability even more.

Will you make a profit with the first

generation BMW i3 and i8 electric

cars?

Yes, we invariably only plan vehicles with

margins that correspond to our internalguidelines. Naturally, we have significantadvance expenditures. Nonetheless, bothmodels will make positive contributions toour operating income.

This of course depends on the demand forelectric vehicles in the market. By 2020, aglobal market share between 5 percent and15 percent is expected for electric vehicles,including plug-in hybrids. In any case, wehave made conservative production runspart of our early planning.

Will your r&d investments increase?

Despite comprehensive investments for thefuture, in new products, technologies and

drive systems, the share of r&d in 2011 willbe within the target corridor of 5 percent to5.5 percent, thanks to efficient developmentprocesses and the strong growth we expect inrevenue. In addition, the share of investmentwill be below 7 percent of revenue by the endof the year due to rising revenues.

What new sales channels will you

establish for BMW i?

We will take new approaches here as well.But we’ll still need the dealer. The business islocal, so service will always take place locally.That’s why we will continue to need ade-quate dealer network coverage in the age of electro-mobility. At first, we will focus onmetropolitan areas in the sale of electricvehicles because we expect the highestdemand there and the service for the newmodels naturally requires dealer investment:high-voltage and carbon fiber technologiesdemand different tools and training.

Will you expand your cooperation

with PSA?

Our hybrid joint venture includes thedevelopment and production of basic com-

ponents and modules for powertrains, stor-age media, batteries and control electronics.The usage varies; however, we will tend touse the models at the higher end of the per-

formance spectrum, and PSA at the lowerend. It makes a great deal of sense to shareone-off expenses and risks because we don’tcompete directly with one another and wewill differentiate the modules sufficiently. Inno way are we risking the dilution of thebrands.

Europe continues to be your core

market with 50 percent of global

sales. How are you positioned

elsewhere?

China’s share of sales came to 14.5 percentin the first half the year. North America con-tributed just under one-fifth; Germany morethan 17 percent. We are maintaining a glob-ally balanced market distribution. We arealso positioned well in all the other high-growth markets, that is, Brazil, Russia, India,Korea and Turkey.

How dangerous are the U.S. and

Japanese premium brands to you?

We are rather relaxed about this from aglobal standpoint. We have built up a repu-tation over nearly 100 years. Any competitorhas to earn this first. I

IN DEFENSE OFTHE NO.1 RANKHow BMW plans to stay the world’s top-sellingand most profitable premium automaker

F R I E D R I C H E I C H I N E R

MEET THE CFO

Friedrich Eichiner will celebrate his 25th anniver-

sary as a BMW employee next year and his fifth

anniversary as a member of the automaker’s man-

agement board. He arrived at the company in 1987

after earning his doctorate in business management

from Ludwig-Maximilians-Universitaet in Munich. He

held a number of jobs in leading posts in logistics,

production and sales before being promoted to

director of corporate planning in 2002. BMW CEO

Norbert Reithofer picked the Bavarian to be the

board member for corporate and brand development

in 2007. Eichiner, 55, was named BMW CFO in

December 2008.

G



S For the complete Friedrich Eichiner interview go to europe.autonews.com/eichinerexecedition S

B

luxury race

Documents