Rupert Stadler, Chairman of the Board of Management of AUDI AG
Speech to the Annual Press Conference 2013
Ladies and gentlemen,
how does the future look? One thing is clear: In economic terms, this year will be at least as challenging as last year. A few weeks ago, the World Bank reduced its forecast for global economic growth in 2013 to 2.4 percent. Growth of global car markets is expected to slow down, too. Compared with the 7.2 percent of last year, the rate of expansion is expected to fall considerably.
How will we at Audi deal with this uncertainty? Also in 2013: We intend to continue our growth, and we are sure that we will do so. Our total deliveries in January and February were 9.4 percent higher than in the prior-year period. That means first of all: We made a good start to the new year. But we also know: This is only a snapshot at a specific time.
Ladies and gentlemen,
you know what our long-term goals are: annual deliveries of more than two million cars by 2020. We have set the number of 1.5 million by 2015 as an important interim target. We have done our homework properly and achieved an increase of 360,000 units solely in the past two years. That means: Firstly: We will reach the mark of 1.5 million sooner than planned. And secondly: We are thus gaining additional entrepreneurial energy and financial strength in the current phase of our growth curve.
It is a crucial phase, because we are now positioning Audi for the next surge of growth. This is taking place at all levels of the company, with people and markets, products and production.
In the coming three years, we will implement the biggest investment program in Audi’s history with a total volume of 11 billion euros. 5.3 billion – nearly half that is – will serve to strengthen and expand our sites in Germany: Münchsmünster and Neuburg near Ingolstadt for example, or Böllinger Höfe in Neckarsulm.
Today, a customer buys an Audi every 22 seconds. The production facilities must keep pace with those sales. And as you know, we are currently expanding our production capacities, for example at our site in Győr, Hungary, and with a new plant in Foshan, southern China. At those two sites alone, step by step capacities will become available as of 2013 for more than 300,000 additional automobiles.
Last year, we decided to build another Audi plant: In San José Chiapa in Mexico. This puts us closer to our American customers, reduces exchange-rate risks, and allows us to export duty-free to the United States and to Europe. We will lay the foundation stone in Mexico in early May.
We have already started to take staff on board. In total, we will create about 3,800 jobs there. We have received about 2,500 applications so far. As a first step, we are recruiting executives and some experts for key positions. The first new colleagues will come to Germany in 2013 for an Audi qualification program.
In 2014, we will start looking for staff for production. That recruitment will take place in close cooperation with the future management. That is the only way to create the required team spirit for such a strategic project right from the start. When the first Q5 rolls off the production line in Mexico in 2016, for the first time in our history, we will be producing a car for the world market exclusively outside Europe. That is a big step for everyone at Audi, not only for our Mexican colleagues.
Our workforce is following the project with great interest: Within a very short time, more than 650 people from Ingolstadt and Neckarsulm have applied to be involved in the Mexico project on site.
In view of the current market situation in Europe, it is becoming very clear that only a global presence can enable us to compensate for fluctuations and to strengthen our plants in Germany. In 2013, we will also increase the headcount in Germany to meet requirements. We plan on about 1,500 new hires and more than 700 additional apprentices.
Ladies and gentlemen,
another thing is important to me in this context: The number of our worldwide sites may increase, but one standard stays the same: Made by Audi.
That is our promise for the same excellent manufacturing and product quality in every Audi – irrespective of where it is made. How do we ensure that? For example, by means of an international training offensive.
The idea of a dual course of study and training is turning into an export success at the Audi Group. We combine the proven theoretical training of local technical colleges with practical experience at an early stage in our apprentice workshops. At Audi Hungaria, we have been doing so successfully for twelve years. In addition, we opened our own training center there in 2011. And since last year, in addition to dual vocational training in Hungary, we also have the dual study system according to the German model, which we initiated together with Győrer Széchenyi University.
In Brussels, dual vocational training is just starting in a pilot phase. We are the very first industrial company there to offer this form of vocational training.
In China we cooperate with the vocational training college in Changchun. We are continuously extending that cooperation. Our goal is to have 650 young people completing their apprenticeships as auto mechanics and mechatronics technicians each year as of 2015. And in Mexico, we are already starting to set up our own training center. Construction will start this April. This is training made by Audi – worldwide. One standard for our products, but one standard also for service in retailing.
Please allow me to give you a brief overview of China in this matter: J.D. Power carries out a survey there each year on how satisfied buyers of new cars are with the brand’s service. Audi was ranked in first position for the third time running in 2012. At present, we are rapidly expanding our dealer network in China. On average, one new Audi dealership will open each week in China in 2013. For example, about half of the Chinese cities with more than a million inhabitants still have to be included in the dealer network. By 2017, we want to increase the number of Audi dealerships to more than 500. The need for training for service personnel is enormous. This year alone, we will train more than 6,000 new sales and service employees there locally. If one also includes the further training of experienced employees, we come to a total of approximately 240,000 man-days of training in 2013. This means that each employee in retailing in China receives an average of 13 days training and further training this year.
In 2013 we will open the world’s largest Audi Training Center in Beijing. This is the only way to achieve the high Audi service standard everywhere with a rapidly growing number of dealerships.
Because developing a market has quantitative as well as qualitative aspects. We are convinced of the formula: Quantity only through quality. The prime example in China is the long version of the Audi A6. It is specially focused on the needs of our Chinese customers. A brief summary of this car in figures: 130,000 units sold in 2012 alone, making the Audi A6 once again the best-selling premium automobile in the market.
In “Best Cars 2013,” a readers’ award from the Chinese issue of “auto, motor, sport” magazine, the long version of the Audi A6 was the winner in two categories. In total, Audi took ten first places – more than any other manufacturer. Among other things, we were awarded the prize for the most environmentally friendly brand. This was partially due to our start-stop technology. It is meanwhile standard on all Audi models produced in China. In addition, we were the first manufacturer to integrate lightweight components into models produced in China.
By taking measures like these, we have reduced the average fuel consumption of our locally produced models by more than 15 percent since 2011. Speaking of local production: I have already mentioned the new plant in Foshan. We are also increasing our production capacities at the plant in Changchun.
Added up, production capacity for 350,000 additional units will be installed in China in the next three years. Together with our joint-venture partner therefore, we are increasing our capacities to a total of 700,000 units each year. But production volumes are just one side of the story. If we want to continue growing, we have to continue anticipating what our customers of tomorrow would like to have on the product side.
Therefore, we will occupy ourselves even more intensively with the specific wishes of our Asian customers in the future. For this purpose, we opened our own center for research and development in Beijing a few weeks ago. More than 300 engineers are working on putting the ideas and trends from the Far East into our products.
Ladies and gentlemen,
we want to be intelligent “understanders of markets” not only in China, but in all markets. To those ends, we have to understand not only our customers’ wishes, but also their reservations. Then we can manage to convince them. Think of diesel engines and the US market for example. Diesel was regarded as a dirty, sooty fuel suitable only for trucks. Now, our clean-diesel technology, sporty starting torque together with long range and efficiency have convinced the Americans as well. Today for example, every third Q7 driver in the United States chooses a TDI.
We will further expand our TDI range in the US market this year – with the A6, A7, A8 and also with the Q5. We supply the biggest range of clean diesel automobiles in the US premium class.
This successful work of conviction helps us to implement our growth plans for the US market. For this year, we have set ourselves the target of delivering the new record number of 150,000 automobiles. Understanding the customers does not only mean understanding which product features they want, but also knowing how they decide on them.
The fact is that more and more customers configure their own personal Audi. Haute couture that is, instead of off the peg. In Germany alone, our revenue from optional extras has increased above-average in the past years.
We said: Not just the car, but also the process of choosing and comparing should be as enjoyable as possible. Our answer is Audi City. In this “dream factory”, our customers configure their desired Audi with the help of the latest computer and media technology. They experience it on enormous monitors on a scale of one to one. Several hundred million combinations are possible. And thanks to the new technology, we are present in the bustling centers of major metropolises. We opened the first Audi City last summer in London near Piccadilly Circus. Two numbers that speak for themselves: 1,000 visitors per week so far, and 70 percent more sales than in the previous traditional Audi forum. At the end of January, we opened the world’s second Audi City in Beijing. The third will follow in Berlin at the turn of the year 2013/2014.
Ladies and gentlemen,
a market is not just a place; it also has the dimension of time. In the Audi Urban Future Initiative, we are occupied with the city of the future. Because we want to understand how the metropolises of the world function. Only then can we play an active part in shaping urban mobility in the long term. Last October, we awarded an architecture prize for the second time, the Audi Urban Future Award. It was awarded to the office of architects Höweler and Yoon from Boston in the United States for their vision of mobility in the year 2030.
Taking the Boston/Washington region as an example, we are together developing a city dossier, a kind of blueprint for how urban mobility can work in the future. A fundamental question is how we will cope with space in cities becoming scarcer. In order to optimally use this limited space, the networking of cars, infrastructure and people will be increasingly important.
At the Consumer Electronics Show in Las Vegas this January, we presented a technology that is pioneering in its field, and has the potential to have a sustained impact on global life. This is not our assessment; it was printed in the MIT Technology Review, the magazine of the most famous technical university in the United States. It listed us as one of the 50 most innovative companies in the world.
We are talking about piloted driving. With this technology the car applies the brakes and accelerates on its own; in stop-and-go rush-hour traffic for example. The driver can make good use of the time, to make phone calls or write e-mails for example. One task for the coming years will be to create the legal basis for piloted driving. In Nevada, we are the first and so far only car manufacturer worldwide to receive a license for tests on public roads. In Germany, we are working with the authorities to find a solution.
Ladies and gentlemen,
we are continuing our model offensive at an unabated pace. On the one hand, we are expanding our range with some particularly emotive automobiles. In its 30th year, quattro GmbH will launch four new RS models on the market. The evolution of the RS philosophy is impressively apparent in the new Audi RS 6 Avant. Despite significantly higher power output, it consumes 30 percent less fuel than its predecessor – partially due to the consistent application of lightweight construction and intelligent downsizing with cylinder-on-demand technology.
If only a small part of the engine’s power is required, some of the combustion chambers are switched off. Then the car operates on four instead of eight cylinders. We want to increase our unit sales of high-performance cars by one third in 2013 compared with 2012. So in 2013, we will have the biggest range of RS models in the past 30 years. And we will therefore spread availability of our RS models to international markets – China for example. The Audi RS 5 Coupe was our first RS model in China in 2012. It is followed by the RS 5 Cabriolet in 2013.
In addition, for the first time we are giving an SUV the RS badge. The Audi RS Q3 is the pioneer in the new segment of compact, high-performance SUVs. We have taken the same sporty approach with the TDI and TFSI versions of the Audi SQ5, which will also be delivered to customers as of this year. Demand for SUVs is rising worldwide. Today, every fourth premium automobile sold is already an SUV. By 2020, it will probably be every third. This is why we are creating a wide range: more sportiness, more variety, more profile, lower consumption.
With the A model series, we are successively rolling out the new A3 family in 2013. The A3 Sportback has been at our dealerships in Europe for the past three weeks. The Audi S3 and S3 Sportback will follow from the summer on. We are adding a new family member with the A3 sedan. This is an important derivative which will stimulate additional growth especially in China and the United States.
And there is one more version, the A3 g-tron. This model can run on both gasoline and natural gas. The range of this bivalent gas/gasoline drive is more than 1,300 kilometers per fill-up. And with the A3 g-tron, we are also covering the spectrum from wind turbine to steering wheel. When the driver fills up with Audi e-gas that is. Because our e-gas project is based on wind power from the Emsland region of Germany. We have just completed the world’s biggest power-to-gas plant in Werlte in the north of Germany. The starting point is electricity from the wind park, which is used to produce hydrogen. We then convert hydrogen and CO2 from a biogas plant nearby into synthetic Audi e-gas. We deliver e-gas to the customer through the public gas network. That is, we use the existing infrastructure. In this way, e-gas is used as a practical form of energy storage for electricity in addition to the battery. When the A3 runs on e-gas from our plant, the customer is driving with a CO2-neutral impact. Because the exhaust system emits only as much CO2 as was previously used in the production process for e-gas. This means that the A3 g-tron is as climate friendly as an electric car whose batteries are charged with electricity from regenerative energy sources. This example shows: Efficiency does not work as a solo, but only in concert. That is why we are looking far beyond the car.
In addition to our e-gas project, we are doing research on other synthetic fuels such as e-diesel and e-ethanol. Here we are working with our American partner, Joule. In the US state of New Mexico, a demonstration plant for the production of sustainable e-ethanol is being built. Microorganisms use the sun’s energy to produce this fuel out of CO2 and industrial water. Its overall CO2 balance is significantly better than with fossil fuel. Another point is that this process needs no biomass, no farmland, and no drinking water. In parallel, we are working continuously on the efficiency of our engines.
104 versions of engines and transmissions at Audi currently have emissions of 140 grams of CO2 or less per kilometer. According to a study by the Center of Automotive Management, among the premium manufacturers, Audi is the brand with the lowest fleet emissions in Germany. And it does not stop there. At the entire Volkswagen Group, we stand firmly behind the new EU climate target of 95 grams of CO2 per kilometer.
To achieve that, we are utilizing the entire spectrum of drive concepts: from diesel and gasoline engines to natural gas to electric drive. At Audi, the starting signal into the electric era has been given. Before the end of this year, you will be able to drive and test the Audi A3 e-tron. As a plug-in hybrid with norm fuel consumption of 1.5 liters per 100 kilometers, a range of 50 kilometers on batteries alone, and nearly 1,000 kilometers in total. The e-tron-version of the Audi A3 is efficient, practical for everyday driving and also affordable. Those are three reasons why we are going our own way in the field of electric mobility.
Ladies and gentlemen,
along with our growth, our responsibility grows too. This applies to all levels of our company: to the product and to the production process, from Mexico to China, and vis-à-vis employees and customers. That is why we are constantly making our automobiles more efficient and safer. That is why we minimize the use of resources in production. That is why we operate as prudent entrepreneurs. That is why we offer young people job training and a career perspective. And that is why we devote our efforts to seeing our customers’ eyes light up with delight. Because our brand promise allows nothing less than that. Thank you!