Volkswagen's Audi 1st-half car sales rise on A4 model

June 28, 2002 BLOOMBERG NEWS is reporting that Audi AG, Volkswagen AG's luxury car unit, sold 4 percent more vehicles in the first half as demand grew for the A4 sedan. The carmaker expects to match last year's record sales.

The Audi brand's sales rose in the first six months of the year to 383,500 cars, the carmaker said at the annual shareholders' meeting. Revenue fell 1.4 percent from a year ago to 11.3 billion euros ($11.1 billion) due to a decline at its Italian distribution unit. Audi didn't give profit figures.

Audi's best-selling model increased unit sales 12 percent. Demand for the 1 1/2-year-old A4 more than compensated for a decline in sales for the top-of-the-line A8 model, the mid-range A6, the Audi TT sports car and the A2 small car.

"The A4 is the newest model they have and they've got some nice variations on it," said Juergen Pieper, an analyst at Bankhaus Metzler, who has a "buy" rating on Volkswagen. "The other models are old and they need to be upgraded."

The A4 competes with Bayerische Motoren Werke AG's 3-Series and DaimlerChrysler AG's Mercedes-Benz C-Class models. Audi also makes convertible and station-wagon versions of the car.

The carmaker doesn't see any improvement in the worldwide car market in the second half of the year. Audi expects to reach last year's sales of 726,134 vehicles.

First-half sales of the A2 fell 16 percent and the A3's sales dropped 13 percent, while demand for the A6 fell 10 percent and A8 demand plunged 23 percent. Sales of the TT Roadster fell 34 percent.

Volkswagen Chief Executive Bernd Pischetsrieder said Tuesday he still expects 2002 pretax profit to be unchanged as Europe's largest carmaker compensates for falling sales by reducing costs. The carmaker expects full-year group sales to fall 1.6 percent to about 5 million vehicles.

Audi Chief Executive Martin Winterkorn, who replaced Franz-Josef Paefgen in March, aims to improve the image of the brand and the quality of the cars while cutting costs. Making Audi's image "sportier" will require introducing models Audi doesn't yet make, such as a coupe and a sport-utility vehicle, Winterkorn said in a speech at the shareholders' meeting.

The carmaker will introduce a new version of the A8 in the last three months of 2002. The current A8 is 8 years old and competes with the BMW 7-Series, Volkswagen's Phaeton and the Mercedes-Benz S-Class. Audis need "more muscle and less fat" to win market share, Winterkorn said. He expects more growth to come from the U.S., though he didn't give a time frame.

Volkswagen has grouped Audi with the Lamborghini and Seat brands to produce cars emphasizing performance, while the Bentley, Volkswagen and Skoda brands concentrate on comfort.

Audi's Autogerma SpA unit imports and sells Volkswagen divisions' cars in Italy. First-half sales of the Volkswagen brand at Autogerma fell, even as Audi-brand sales rose. The car-industry's sales in Italy in the first five months of the year fell 12.7 percent to 1.05 million vehicles.

"The decline at Autogerma is concentrated on the price segment below Audi," said Winterkorn.