Audi Boss Paints Gloomy Picture for Small Automobiles

Matt Posky
by Matt Posky
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audi boss paints gloomy picture for small automobiles

While Europe often appears as a safe haven for punchy subcompacts, the reality is that the continent’s biggest sellers happen to be reasonably sized automobiles equipped with a tepid engine option. The Volkswagen Golf, Toyota Corolla, and Škoda Octavia (especially if you happen to travel through any former satellite states of the Soviet Union) are absolutely everywhere. Europe also has a strong taste for many of the compact crossovers that are popular here in North America, giving subcompacts an increasingly small share of the overall market. And it’s projected to get smaller (globally) under the existing European regulations.

Pint-sized economy vehicles aren’t exactly profit leaders for automakers and their margins are only going to become slimmer. The EU is now reaching a point where building them won’t make sense, as tailpipe regulations will eventually force some amount of electrification. This will jack up their price to a point where the kind of people that might have been considering them will probably shop used. But don’t take our word for it; Audi CEO Markus Duesmann recently said this is probably what will kill the A1.

“We do discuss what we do with the small segments. In the A1 segment, we have some other brands [in the Volkswagen Group] who are active there and very successful, with very high production, so we do question the A1 at the moment,” he told Autocar in a recent interview.

“We will certainly offer Q2s [small SUVs] and the like,” he continued. “That might be the new entry level for us; we might not do anything smaller.”

From Autocar:

The future of small cars has come under sharp focus in recent years. Profit margins have become extremely slim as manufacturers battle to meet stricter legislative and safety requirements, reduce emissions and offer a greater array of technology yet still sell at a palatable price to a market now more interested in SUVs.

The cost of electrifying small cars is proving an even tougher problem, although Volkswagen brand CEO Ralf Brandstätter has said that he’s committed to producing an electric ‘people’s car’ with a starting price below £18,000 (roughly $25,000 USD) as part of the ID range.

Before my EV advocates start posting about tax credits and fuel savings in the comments, it should be said that most people aren’t willing to take the time to calculate the lifetime ownership cost of a vehicle. Furthermore, we’re less than certain one can reliably assume the savings offered would actually offset the price bump associated with electrification. That’s especially true for this segment, where the cost of adding a battery might just push customers into something larger. Small EVs also don’t hold their resale values particularly well and will eventually have to have their batteries swapped out, which might not be financially prudent on exceptionally small vehicles. Audi was even working on an all-electric version of the A1 that was reportedly scrapped in 2020.

It’s likewise tiresome to see the continued advancement of regulations that are supposedly designed to protect the environment and uplift the poor that effectively do neither. By making subcompact and microcars untenable without electrification, consumers will effectively be forced to buy more expensive and less efficient automobiles than could have otherwise been built. But hey, at least the manufacturers managed to protect their bottom line by ending production on the segment comprised of what we used to call “economy cars.”

Audi is already considering which ICE models to eliminate to make way for electrics. VW Group is going all-in with alternative powertrains and its brands are supposed to become awash with new models catering to this. But the CEO made it sound as though some final decisions still need to be made, especially on the European market.

“We have to cut back,” said Duesmann said. “As we look at Q4 E-tron [SUV], we have a model where we have similar combustion-engine-powered models, and certainly we don’t want to have the same portfolio electrically … We make purpose-built electric cars because we can offer more functionality [that way], so we will certainly cut back our combustion portfolio in the next 10 years. We have to and we will.”

[Image: Audi]

Matt Posky
Matt Posky

Consumer advocate tracking industry trends, regulation, and the bitter-sweet nature of modern automotive tech. Research focused and gut driven.

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  • TomLU86 TomLU86 on Feb 11, 2021

    @ThomasSchiffer What you describe is disturbing (as this is the direction the US seems to be going). Supply of electricity is insufficient--rather than let the market decide (raise the price until demand balances out), the FRG is resorting to...rationing? I am kind of shocked. I can turn off some lights, but the refrigerator? May I ask, how many Euros a month, for how many KwH (kilowatt-hours) is a "typical" German electric bill? If it's 100 euros, that's really not as bad as you make it sound. Germany is an affluent nation, and unlike the US, most Germans do not have to drive cars as far or as often as Americans...and many don't have to drive at all. Perfect candidates for EVs---oh, but it is challenging to charge an EV overnight if one does not have access to their own parking spot with charger, something much more difficult in densely populated areas (which outside of North America is the norm).

    • See 3 previous
    • TomLU86 TomLU86 on Feb 12, 2021

      @ThomasSchiffer Thank you Thomas, I was curious. That sounds expensive to me, yes. While I do not know if you use electricity to heat your home. If heating is separate (homes heated with natural gas have a separate bill), by US standards, 168 Euros, about $202, is very high. I looked at a recent bill, in Michigan it was $61 for 311 kwh, or say $0.20 per Kwh (is your figure 0,32 euros or 0.26 euros converted to 0,32 dollars--both are high, but 0,32 euros is double, while 0,26 euros is 60% more). Fossil fuels have been good to the West in general and America in particular, but they have many nasty side effects. We are told the nasty side effects are the reason we must get away from them. But, as you say, how can we have electric cars without electricity? The next question may be, "who really needs a car?" and "who will decide that?"

  • Art Vandelay Art Vandelay on Feb 11, 2021


    • ToolGuy ToolGuy on Feb 12, 2021

      Self-referential comment is impressive, but can you do a recursive one? :-)

  • Ernesto Perez There's a line in the movie Armageddon where Bruce Willis says " is this the best idea NASA came up with?". Don't quote me. I'm asking is this the best idea NY came up with? What's next? Charging pedestrians to walk in certain parts of the city? Every year the price for everything gets more expensive and most of the services we pay for gets worse. Obviously more money is not the solution. What we need are better ideas, strategies and inventions. You want to charge drivers in the city - then put tolls on the free bridges like the Brooklyn, Manhattan and Williamsburg bridges. There's always a better way or product. It's just the idiots on top think they know best.
  • Carsofchaos The bike lanes aren't even close to carrying "more than the car lanes replaced". You clearly don't drive in Midtown Manhattan on a daily like I do.
  • Carsofchaos The problem with congestion, dear friends, is not the cars per se. I drive into the city daily and the problem is this:Your average street in the area used to be 4 lanes. Now it is a bus lane, a bike lane (now you're down to two lanes), then you have delivery trucks double parking, along with the Uber and Lyft drivers also double parking. So your 4 lane avenue is now a 1.5 lane avenue. Do you now see the problem? Congestion pricing will fix none of these things....what it WILL do is fund persion plans.
  • FreedMike Many F150s I encounter are autonomously driven...and by that I mean they're driving themselves because the dips**ts at the wheel are paying attention to everything else but the road.
  • Tassos A "small car", TIM????????????This is the GLE. Have you even ever SEEN the huge thing at a dealer's??? NOT even the GLC,and Merc has TWO classes even SMALLER than the C (The A and the B, you guessed it? You must be a GENIUS!).THe E is a "MIDSIZED" crossover, NOT A SMALL ONE BY ANY STRETCH OF THE IMAGINATION, oh CLUELESS one.I AM SICK AND TIRED OF THE NONSENSE you post here every god damned day.And I BET you will never even CORRECT your NONSENSE, much less APOLOGIZE for your cluelessness and unprofessionalism.