Audi Seeks to Raise Prices and Move To Profitability

NEW YORK, Oct 11, 2006; Reuters reported that German auto maker Audi on Wednesday said it planned to gradually raise car prices in the United States as it seeks to return to profitability and close the gap with other premium brands in the world's largest auto market.

Audi, Volkswagen's premium unit, sells its cars for about 4 percent less than rivals BMW and Mercedes-Benz , stifled by a weaker image, said Johan de Nysschen, executive vice president in charge of Auburn Hills, Michigan-based Audi of America Inc.

"We want to close this gap in five years," he told reporters in New York.

The car maker, he said, planned to raise its prices over time as it launches new models and improves its brand image and dealer network. "You can't push pricing too quickly," said de Nysschen.

To improve its image, Audi is considering showcasing its cars in more product placements like it did in the science fiction movie "I, Robot."

In the Spring, it also held "lifestyle" events that offered test drives and featured partners such as exotic travel company Abercrombie & Kent, upscale stereo maker Bang & Olufsen, and motorcycle maker Ducati.

De Nysschen and other Audi executives were in New York for the opening of an Audi Forum - a 6,400-square foot showroom on Manhattan's well-heeled Park Avenue, which de Nysschen said is one of Audi's efforts to improve its brand image.

The showroom, which features an 8-foot by 6-foot high-definition video screen that meanders along the ceiling, can display up to five cars and offers passersby the opportunity to learn more about the brand.

The New York Audi Forum is the first showroom of its kind in the U.S. and the company's ninth worldwide. It is a marketing rather than a sales venue. Any cars sold at the New York site, for instance, will be delivered by a local dealer.

Audi is considering similar facilities in Los Angeles and Miami, de Nysschen said.

Audi aims to be break-even in the U.S. this year and be profitable next year, after posting a loss last year.

The brand, which is known by four interlocked rings, expects 2006 sales to top 86,000 cars, which would mark Audi's best-ever U.S sales performance since 2003, de Nysschen said.

Breaking the 100,000 mark for annual car sales was "possible" in 2008, amid expectations of a 3 percent to 5 percent rise in Audi U.S. sales next year, he added. Audi sold 83,000 cars in 2005.