Audi Sales Still Weak, Despite Federal Report That Car Is Safe
In November, 1986, CBS’ “60 Minutes” ran a story saying that Audi’s upscale cars had a tendency to suddenly, and dangerously, accelerate.
Audi hasn’t been the same since.
That 1986 report sent the West German auto maker’s sales into an immediate tailspin, despite the fact that there was never any conclusive evidence of a technical problem. From a 1985 peak of more than 73,000 cars, Audi’s U.S. sales plunged to fewer than 23,000 last year.
Finally, in July, the federal government, which had investigated the sudden acceleration charges, cleared Audi in a major report, concluding that the problem resulted from driver error.
The report said there was nothing wrong with Audi cars and that drivers were guilty of “pedal misapplication,” meaning they had inadvertently stepped on the accelerator and were blaming the cars for their mistakes. Similar findings were released earlier in the year by the governments of Canada and Japan.
Slight Rise in Sales
For Audi, the news provided a measure of vindication; Audi trumpeted the conclusions of the federal report in an advertising blitz, titled “Case Closed,” as soon as the findings were released.
But the reports seem to have come too late to help Audi, the luxury car division of Volkswagen, regain the bulk of its lost customers. Sales have risen slightly in recent months, but they remain woefully behind the levels Audi posted before the “60 Minutes” broadcast.
For one thing, the report clearing Audi has received far less media coverage than the earlier allegations of safety defects. As a result, Audi’s most critical asset--its image among America’s most affluent and selective car buyers--has yet to recover.
In addition, the company’s dealership network has been decimated during the past three years, further limiting the company’s potential for increased sales. Today, Audi has 53 fewer dealers than it did in 1986 and fewer than 400 dealers overall.
Still, Audi officials remain hopeful that they can now turn things around. “There’s been a tremendous boost in the confidence of our organization since the (federal) report came out,” says Tony Kirton, Audi’s U.S. marketing director. “Now, in fairly short order, we think we can become a significant player again in the luxury car group.”
But industry analysts aren’t so sure. For one thing, the luxury market has become far more competitive since Audi’s public relations crisis began three years ago. Now, instead of just facing other European luxury makes, Audi must do battle with the sophisticated, upscale Japanese cars coming from the new luxury divisions of Tokyo’s Big Three--Honda’s Acura line, Toyota’s Lexus cars and Nissan’s new Infiniti models.
“I think it will be extremely difficult for Audi to ever get back to where they were,” says William Pochiluk, founder of Autofacts, a Paoli, Pa., automotive market research firm.
Revamped Models
But that’s not to say Audi hasn’t been trying hard to win back customers. Soon after the “60 Minutes” report, the company offered the largest rebate in the car industry’s history--$5,000--to any Audi owner willing to trade in for a new one.
Today, the company continues to offer a comprehensive and unique warranty program that pays for all types of regular maintenance on leased vehicles, even down to the purchase of new wiper blades and replacement oil.
Audi has also moved to revamp its lineup in an effort to develop a fresh image.
Most notably, Audi has changed the name of its troubled 5000 series--the prime target of the sudden acceleration charges. In the 1989 model year, the Audi 5000 was modified and renamed the Audi 100, while the Audi 5000 turbo was altered and renamed the Audi 200. The company’s Quattro series has also undergone a drastic realignment, with a high-performance, V-8-equipped version available this fall.
Such actions have led to modest sales gains in recent months--enough to persuade Audi officials that the hemorrhaging may finally have ended. Indeed, sales in early September are showing a 54% gain from the same period in August. “This is very, very encouraging to us,” says Bert Triller, Audi’s Los Angeles-based Pacific zone manager.
Now, with a 1990 sales forecast of 32,000 units, Audi is counting on its first year-to-year improvement since the “60 Minutes” report.
The company’s crisis “certainly forced us to be creative,” notes Kirton. “When you come out of something like this, you realize you came out stronger.”
