By on April 13, 2012

With a meeting for Volkswagen’s supervisory board looming on Wednesday, a decision regarding Audi’s newest North American factory will likely be made. Two choices are available, but the key word seems to be North America.

As previously reported, Audi is looking to build a plant in Mexico. Reports say that Volkswagen’s Chattanooga factory was being touted by VW as an ideal solution. But resistance from within Audi led to the Mexico proposal, for a distinct factory that would start off with production of the Q5 in 2015.

No choice has been decided upon, but the scuttlebutt seems to be that Mexico will win out. Chattanooga’s factory is well regarding by VW’s top execs, but Audi likes to do things Audi’s way, and it looks like they’ll succeed yet again.


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17 Comments on “Audi’s North American Factory Could Be Decided On April 18th...”

  • avatar

    I still remember the switch to the Mexican made Passat. Can they possibly maintain a German import price premium while hecho in Mexico?

  • avatar

    hecho in Mexico is fine by me for a $20k Jetta where a pricepoint has to be maintained. It is NOT ok for a $40k Audi. Audi is building the cars for as cheap as they can. I get that, but I’m not going to pay to that kind of coin for a mexican built Q5 when I can walk across the street to the BMW dealer and get a US built X3. And you can bet your tailpipe that BMW is gonna trade on that bit of trivia if it comes to pass.

    Audi has to pull heads from butts and realize that VW has made US market cars in Mexico for many years and those cars have made a lot of eneimies of VW. Some of them ‘defected’ to Audi and the implied quality bump from a German built car.

    Now all the VW Puebla apologists are gonna come out of the woodwork and whine about how that’s not right. Right and wrong doesnt’ matter, brand perception does, and this is not a good move.

    • 0 avatar

      You’re absolutely right. “Made in Germany” commands a price premium. I expect an entry-level or compact car to be made in Mexico to help the bottom line, but a higher-end car built there with either a a lower price point, or the same high-price point reduces perceived value.

      I am a Puebla apologist, but I’ll say that high-end cars should not be built there!

      Although it the Phaeton was built there, then that could have been its excuse…

    • 0 avatar
      DC Bruce

      Interstingly, the Mexican-made Ford Fusion and its twins have excellent and long-standing reliability records.

      But, I agree, that fact doesn’t undermine your basic point. “Engineered in Germany; assembled in Mexico” somehow doesn’t sound like a catchy ad slogan for a premium automobile.

      • 0 avatar

        The Mexican built Fusion probably has better reliability than *any* VAG product, Mexican or German made.

        But I agree with everyone here that a “Made in Mexico” badge won’t help the image of a premium “German” car.

    • 0 avatar

      I’m sure Audi marketing will figure it out. Apple’s “Designed in California; Made in China” still gets people camping out for a week for premium-priced electronics that nets them 40% margins.

      The folks who already think that Audis are just VWs with leather will continue to do so, even while it’s still made in Germany.

    • 0 avatar

      People seem to buy plenty of $50-70k Mexican Cadillacs these days.

  • avatar
    Hildy Johnson

    Ontario could do with a shot in the arm, but unfortunately that won’t happen with the strong Canadian dollar.

    Anyway, the whole point of VW’s Chattanooga exercise was to demonstrate a commitment to the U.S., to no? With Audi’s higher profit margins, it should be a no-brainer to either go to Chattanooga or find another location in the U.S.

    • 0 avatar

      “Ontario could do with a shot in the arm, but unfortunately that won’t happen with the strong Canadian dollar.”

      Agreed – and there is already a good base of skilled employees and automotive suppliers in Southern Ontario. The commodity boom is good for Canada in some ways, but sure doesn’t help manufacturing…

    • 0 avatar

      Chattanooga is the logical choice for North America. Why on Earth you take your already overpriced premium brand to Mexico to save a few bucks is mindboggling. They must think ‘hey we’ve hooked Gen Y so lets just shove garbage up their tailpipes because they’ll buy it for image’. I’m not anti VAG but if they go there I hope it blows up in their faces.

  • avatar

    VAG evidently did not perform a market study before committing a billion dollars to a new plant in Mexico, nor have Honda, Mazda and Toyota. You should all alert VAG about your concerns. I’m sure they’ll appreciate your knowledgeable input.

    • 0 avatar

      The A5 in my garage is less than a month old. I would not have bought it if it were made in Mexico unless I had several years of data proving me wrong.

      I am their demographic. There are 4 Audis less than a year old on my block with our A5 being the cheapest (S5, Q7, A7).

      We actually do have reasonably smart folk here. Perhaps most Audi buyers don’t know or care about origin, but enough know someone who does know and care that it would switch them away in many cases. Audi of all companies should know perception trumps reality.

  • avatar
    Speed Spaniel

    Other than bananas, I wouldn’t buy anything from a third world country.

    • 0 avatar

      Drugs?? Just kidding … Hope you do not like seafood as most of that comes from the Third world

      • 0 avatar

        Dude, are you kidding. Who eats seafood without knowing where it’s from? Mexican seafood is fine anyway. They also have some of the best guys at all sorts of things that we don’t do anymore. I would bet that car designed to be built in places like Mexico can be better as the examples above, but if its not designed with the work force in mind? No.

        Anyone think they will design Audis that way? Even if they do…

  • avatar

    My only experience with Puebla VW’s was a 1998 GTI-VR6, which I bought new after graduating from school and getting my first real job. It was an interesting, yet tragic, car in that the german-made powertrain was absolutely bulletproof, while the entire remainder of the vehicle was total crap. Although it isn’t fair to make generalizations based on a single vehicle experience, if Audi starts making cars there I can’t help but expect they’ll be just like my old GTI.

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