Yannis

Audi's US unit plans to pull earnings out of red

AUDI AG, the luxury car division of Volkswagen AG, said its US operations will earn money this year for the first time since 2001 as the unit increases prices and reduces incentives.

"It will not be substantial, but we will be profitable this year," Johan de Nysschen, Audi of America's executive vice president, said on Monday in an interview at the North American International Auto Show in Detroit. The unit cuts its 2005 loss by more than US$80 million from 2004, de Nysschen said, declining to provide a figure for the loss.

Audi Chief Executive Martin Winterkorn is focusing on the US market as a source of growth as he tries to boost overall profit and worldwide sales. Audi's net income increased 7.4 percent in 2004 to 871 million euros (US$1.05 billion), compared with a profit of 677 million euros for the Volkswagen group. US sales last year climbed 6.6 percent to 83,066 vehicles, and the carmaker expects a 2006 gain of at least 6 percent.

"I know a lot of people who are looking at Audi for the first time ever and they range in age from 24 to 38," said Rebecca Lindland, a market analyst with Global Insight Inc, who was at the Detroit show. "Audi is really seen as an alternative."

Audi grew sales in 2005 while increasing prices, de Nysschen said. The carmaker raised the base price of the A4 luxury sedan by 11 percent between the beginning of 2004 and the middle of 2005. Audi has increased the price of the A6 mid-size sedan 17 percent since a new version went on sale in November 2004.

The new A4, which hit US showrooms in April last year, sells for US$27,640, while the A6 retails at US$40,820.

"We are presently about 4 percent below BMW's pricing in the US, and we will be working toward closing that gap over the next three years," de Nysschen said.

Audi reduced its US incentives on average by US$1,500 per car in 2005 compared with 2004, saving the company about US$35 million, de Nysschen said. Additional cost cuts, such as eliminating positions and decreasing travel, reduced spending by another US$15 million last year.

"We have made a vigorous attack on structural costs," he said.

Audi will add 44 to 47 exclusive dealerships in the United States in the next three years, de Nysschen said.

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Tumbo

Great news!

I wish Audi big luck in the US market

Yannis

I 'm sure the Q7 will pay a big role in that.

siko

Hmm, I never realised things were that bad that they were actuelly in the red.

Anyhow, it's good to hear they're making money. I'm sure the Q7 will help them too.

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