Audi to Dealers: Wean Yourselves Off Incentives and Get Ready to Push EVs
Along with the rest of Volkswagen AG, Audi has made plans to invest heavily into electric vehicles. The company expects EVs to comprise 25 percent of its U.S. sales by 2025 and is devoting the e-tron moniker to an entire division of electrified models, with the first arriving next year.
Addressing the J.D. Power Summit at this year’s National Automobile Dealers Association Convention and Expo, Audi of America President Scott Keogh told salesmen to welcome the electric mobility market with open arms or learn to cope with an ambivalent future. However, jumping head-first into a relatively small market with a huge potential for growth isn’t without pitfalls, and it isn’t unwise for dealers to remain cautious. Still, with Audi planning to introduce three new BEVs within the United States by 2020 and Volkswagen Group hoping to have 30 battery-electric models out by the 2025, you can see why Keogh is pressing the issue.
According to Wards Auto, he’s not exactly thrilled with the way dealerships have been doing business at the present, either. Many have become comfortable offering large incentives to encourage sales while recouping the loss in the servicing and parts department — something that will become less lucrative when Audi goes all-electric.
“We have to look at alternative channels and start to make money,” Keogh told dealers. “These cars are going to have to be fixed less. But you’re going to have a host of opportunities around the battery and helping the customer in their home.
“That’s a very, very, profoundly dangerous game,” he continued. “Because you end up telling the customer…[the product] has diminished value. We have to come to the point where we are selling a product that has value. Because [if] you have to have a strong brand, or frankly, you don’t have anything.”
Keogh believes the move toward electrification in the United States will become unstoppable as charging infrastructure continues to develop. Volkswagen has pledged spend $2 billion installing public charging utilities across the nation as part of its emissions cheating punishment, Tesla has been perpetually expanding its own network, and most states have green initiatives dedicated toward EV powering solutions.
The lessening of dreaded range anxiety should help ease dealership concerns over the swift normalization of electrified vehicles as the general public sees fewer downsides to EV ownership.
“All this fright about where am I going to get a charge is going to go away extremely fast,” Keogh claimed. “The technology on this front is moving at a staggering pace. You’re going to be looking at a marketplace in the next seven, eight, nine, 10 years where for 30 or 40 some brands their entire business is going to be battery-electric vehicles.”
“Do we want to jump in and compete? Without a doubt,” he said. “We have the resources, the scale, the infrastructure, the customers [and] the dealers to compete in this new order.”
[Image: Audi]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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That's pretty rich of Scott Keogh to tell the dealers to stop whoring out cars when he is the one who revised the the 200k in 2020 to 200K in 2015 without any new product just to stroke his humongous ego. Audi's were worth more when dealers weren't sitting on inventories of 200 or more, now the customers are addicted to rebates and discounts. Why I left the brand, I couldn't make real money selling Audi's anymore.
While cross hopping for a midsize sedan I was shocked to realize that basic Audi A6 was priced pretty much the same as BMW 525. A6 looks pretty nice, but BMW has some serious discounts on 5-series these days. I am frustrated with the new Mercedes E-class pricing. Basic luxury sedan for $60K with 4-cylinder engine? That gave me a pause... I was expecting to see A6 at around $40K, but dealers are asking around $47K. This made me think how would the venerable German brands fare in the brand new world of electric vehicles. Likely that cars will go the way of electronics. All production will be moved to Asia. Are cars becoming more and more a disposable commodity like TV's/VCR's through the 60s-80s?