By on December 16, 2010

Ever since four-door coupes became a dime a dozen, the European auto industry has been looking for a new niche, and for much of the past year or so, it seemed that the next big thing would be “small premium.” Inspired by the MINI, European automakers from Alfa to Audi have been trying to get consumers to spend big money on tiny, plush cars. But with Audi’s A1 starting at €15,800 ($20,873), it seems that even the efficiency-happy Germans aren’t willing to pay the price of entry for this new niche. Audi built capacity for 100k A1s at its Brussels plant, but since introducing the car in August, Audi has sold only 20k of the pricey subcompacts. And yes, the slow sales do seem to be tied to the exorbitant pricetags.

AutoWeek reports

”Audi is simply asking too much money for a small premium car,” Metzler Bank auto analyst Juergen Pieper told Automobilwoche. He said Mini could charge high prices for its models because the brand has a cult status.

Some German dealers believe Audi has priced the A1 far too high for the the young target group at which it’s aimed. ”For them it is simply too expensive” a German Audi dealer told Automobilwoche.

And no wonder: sales of small cars are down across Europe in the aftermath of the world’s largest Cash-for-Clunkers-style incentive program. Plus, gas remains relatively cheap around the world. And with the A1′s downscale cousin, the VW Polo, retailing at €12,275 and up (and the Skoda Fabia starting even lower), there are plenty of fairly-premium subcompact alternatives available at much lower prices.
But Audi insists that nothing is wrong with the A1, saying
The A1 is enjoying considerable success: The company stands by the estimate made at the time of the car’s launch that around 50,000 units will be built by the end of 2010 and 30,000 of them delivered to customers.
But actions speak louder than PR talking points, and Audi is pushing the release of a five-door variant of the A1 forward to 2011, a year earlier than it was initially planned for. But with an entire niche hanging in the balance, it’s not clear that two more doors will justify Audi’s gamble that Europeans will pay compact prices for a subcompact car.
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21 Comments on “Even In Germany, $20k Is Too Much For A Subcompact...”


  • avatar
    moneyandwheels

    I find this ridiculous since a 2011 Golf 5 door starts at $21,475 in Canada..  get the Highline and it’s $26,475.. how is $20k starting for an Audi subcompact too much?

    • 0 avatar
      moneyandwheels

      Oh and the 3dr Sportline Golf is $23,900..

    • 0 avatar
      moneyandwheels

      Oh yea and how about the ever so uninspring Mercedes B200 starting at $29,900?

    • 0 avatar
      Marcel B

      Audi A1 is much smaller than a Golf.
      It’s the same size as VW Polo, less than 4 meters long.

    • 0 avatar
      moneyandwheels

      Oh didn’t know it was that small, even still is $20k so outrageous for an entry level Audi? I know I’m not accounting for exchange rates and such, as well as vehicles being more money in Canada than say in the U.S. As for getting a lightly used A4 for the same money, the cheapest 2009 A4 in Ontario is $30k with 20,000km on it, cheapest 2008 is $24k with 90k on it. Even being a used car guy myself $20k still doesn’t seem too bad, and certainly not bad enough for the dealers to complain about it.

    • 0 avatar
      jmo

      Money,

      Ed’s just confused he’s trying to convert € price to $ without adjusting for the 19% VAT (among other things).

  • avatar
    stryker1

    It makes sense considering that you can probably get a lightly used A4 for the same money.

  • avatar
    jmo

    But with Audi’s A1 starting at €15,800 ($20,873)

    We aren’t starting this nonsense again, are we?  Due to taxes (VAT) and at current exchange rates €/$ car prices are pretty much directly comparable.  A car that’s €15,800 in Germany would sell for about $15,800 in the US.

    • 0 avatar
      SimonAlberta

      In my opinion it is almost impossible to compare the prices from one country to another and draw accurate conclusions without taking other factors into account.
       
      For example, in one country wages might be higher, or cost of housing may be lower, or overall levels of employment might be higher, food prices might be high, etc, etc.. Also, the perception of a product in one country may be dramatically different to another due to culture, history and so on.
       
      What I am getting at is that each market has its’ own factors and simply comparing prices for a given product around the globe only tells a small part of the story.

  • avatar
    Fusion

    There was one article about this in the german press, and now it gets copied everywhere. What about your usual pride in your fact-checking – which would result in finding out there really isn’t much information. Which could be guessed, if the article you are basing a “A1 not selling as planned” news on is actually calles “Audi denies high price hits sales…”
     
    The A1 has been on sale in Germany for less than three complete months. Its launches have only just happened in other european countries (its been on sale since mid November in the UK for example), its out of european launches (Australia, a rumored china launch) haven’t even begun. Selling 20k cars in this very limited time window, with only limited availability and just one body style seems not that bad. In Germany its selling on par with the Mini. Since September, Mini has gotten about 45k sales in Europe+EFTA, with several body styles, motorizations and availability in all countries…
    Audi has recently expanded production plans for 2011, up by 20% (to 120.000 vehicles), after the sales started. Doesn’t seem like a reaction to sub-par sales, does it? The push forward of the five door car has been denied by Audi internal sources (that info was in the original Automobilwoche report, sadly not in the Autoweek one)…

  • avatar
    MBsam

    Is 20k units since an August launch really that horrible? This is written like the had a target of 100k and only sold 20k for the whole year. That’s still a formidable volume for an upscale car maker on a model that is only being sold in select European countries…

  • avatar
    HerrKaLeun

    moneyhandwheels: comparing a used car  or a Canadian car to an European new car price tag isn’t useful at all. We’ve had that discussion before. first there is VAT, which is included in the European prices (19% in Germany?) but not in Canada/USA. then you also have generally higher prices in Europe as discussed before. Ipaid for my Mazda 6 here int he US less than a Mazda 3 would have been in Germany even adjusting for VAT etc. One advantage of being here.
    Even if Audi sold it for $ 1, I still could find a used Audi to beat that price.
    This Audi at 15K euros compares to a stripper Golf with base engine (which may be 90 hp? not sure), 2 doors, and a steering wheel if you are a good negotiator. This isn’t too bad considering it is Polo size and has the 4 rings. You can make that comparison with every VW/Audi that you get a class larger VW for the smae price you get an Audi. i coudl make the same comparison with Toyota/Lexus and Honda/Acura. This is the premium you pay for a premium brand. Nothing new here, nothing specific to small cars or Audi.
     
     
     

  • avatar

    But it will be a barebone A1 that almost nobody would buy. Add a decent engine and a moderate trim level plus some other options and you will end up high in the twenties (Euros).

  • avatar
    martin schwoerer

    I was gonna call it “just a Polo in drag”, but then I remembered the Polo is already a Skoda Fabia in drag.
    So Audi is asking people to pay a premium over a premium. In this case, most probably because it’s not really a member of the company-car cohort (in which people get rewarded with sparkling wheels in return for being good campers), it doesn’t work. Is that a wonder?

  • avatar
    - mr -

    It’s basically a Polo in drag and not even particularly good looking. I certainly wouldn’t buy one but then I’m a hyprocrite as I own an Alfa MiTo (which is a Fiat Punto in drag)…..

  • avatar
    vww12

    People forget the low entry-level salaries prevalent across Europe for young people.  Over there, €20,000 isn’t just money you find on the sidewalk.
    People forget the per capita GDP of Germany is about the same as that of people in West Virginia.

    • 0 avatar
      martin schwoerer

      GDP per capita 2009 Germany $40,000
      GDP per capita 2009 West Virginia $32,219
      Source: Wikipedia
      May I suggest a visit to your local pharmacist for an OTC laxative?

    • 0 avatar
      CJinSD

      martin schwoerer,

      $40,000 is a convenient average. http://en.wikipedia.org/wiki/List_of_German_states_by_GDP_per_capita

      German average as of September 2010 is $35,236. That is 9% better than the number you provided for West Virginia, but by no means enough to make up for VAT and achieve an equal standard of living. May I suggest using some judgement when you find an average that contains 4 zeros?

    • 0 avatar
      martin schwoerer

      I quoted $40k based on this:
      http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita
      , whereas the IMF says $40,512 for 2010, the World Bank says $40,873 for 2009 and the CIA says $40,800 for 2009.
      Mea culpa for not saying “roughly, based on various estimates” in the original post.
      But the $40k statement remains right, and the West Virginia comparo wrong.

  • avatar
    mpresley

    I’ve not understood VWs plan.  Taking the Passat upscale could cannibalize A4 sales.  Especially since the newer A4 appears to be Passat-sized.  Is every Phaeton sold an A8 that is not?  So where does that leave the 1 and 3?  Competing with Polos/Golfs?  I guess it all makes sense, somewhere.  But it’s not very intuitive to the outside observer.

  • avatar
    PeteMoran

    Auto manufacturers know that among what was the first car owning demographic (18-25yo), they’re not interested in cars at all, especially in Europe.


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