Audi has ‘strong foundation’ to deal with crisis

AUDI Australia is moving full-steam ahead with a stream of important new model releases this year, but the continuing ramifications from the COVID-19 pandemic has forced the company to “plan for the worst scenario and hope for the best”.

In an interview with GoAuto, Audi Australia managing director Paul Sansom said the ‘contactless’ launch experiment earlier this month of the all-new Q3 Sportback and facelifted Q7 SUVs demonstrates how different thinking can help overcome obstacles created as a result of the heavy restrictions in place across the country.

“The first couple of months have been positive for Audi Australia in an obviously difficult marketplace,” Mr Sansom said.

“The main reason for that is that we had it pretty tough in 2019 with a lack of supply on a lot of key models. But that’s all behind us now, and the new products and launch line-up is really exciting for 2020.

“And despite the coronavirus, we’re still finding innovative ways of launching cars, like the Q3 Sportback and Q7 product improvement.”

Audi’s sales in Australia were up 9.7 per cent to the end of February after strong, positive results in the first two months of trading, only to tumble 30 per cent last month to now be down five per cent at the end of the first quarter. 

Mr Sansom said momentum had begun to build this year after nearly two years of sales decline due in part to the unavailability of key models after the bottleneck of Europe’s WLTP testing requirements, which the Volkswagen Group – among other manufacturers – has struggled to complete given the sheer number of different powertrains offered.

“We’re excited to launch the cars, albeit in a different way,” he said. “Those cars, together with the A1 and other models, have already had an impact on our early market share in 2020. And there’s a lot more to come and none of that will be interrupted … and there’s plenty of opportunity to do that because the product line-up this year is quite staggering.

“Of course, we’d rather be launching them in a more buoyant marketplace, but even so, we’ll continue with our plans.”

Bottlenecks in Europe that have held up several specialised models are freeing up and a flood of sportier, niche Audi models are expected to arrive here between May and August, including the return of the SQ5, S4, S5 and S8, as well as the hardcore RS3, the facelifted TT RS, R8 supercar and RS4 Avant, Sportback and Coupe variants.

There are also the new-generation iterations of the RS6, RS7 and RS Q3, debutantes like the RS Q3 Sportback and RS Q8, and the facelifted A4 and A5.

By the end of the year these are scheduled to be joined by the A6 Allroad, the long-awaited full-electric E-Tron and E-Tron Sportback and the box-fresh A3 Sportback – though ‘scheduled’ is the operative word here.

Despite the product rollout, Mr Sansom said Audi Australia’s operations are obviously in a state of flux as a result of the COVID-19 crisis, but believes his company’s response is the right one for his staff, dealers and customers alike.

“In terms of bracing ourselves for the pandemic, I don’t think anybody would have knowingly planned for this situation such as the one we’ve found ourselves in,” he said.

“But the response you can see from the government stepping in so quickly and strongly to support all businesses all over Australia in any sector and their employees more importantly is a measure of how serious this is for the country.”

Mr Sansom said Audi’s difficult period over the past 18 months – which produced annual sales declines of 19 and 12 per cent in 2019 and 2018 respectively – has hardened the brand for the COVID-19 crisis.

“From our point of view, we had a pretty tough 18 months with the shortage of supply and therefore we had a lot of unexpected scenarios that we’ve navigated through,” he said.

“So (we) therefore have a lot of experience navigating these sorts of situations. We have a great response management coming into this crisis, and our business was in really good shape coming into this crisis, so we are strong, we have a really strong foundation and a really strong team.”

Mr Sansom acknowledged that Audi’s dealer partners were in a difficult position, saying that “all dealers are going to have a tough time during this period when clearly demand on sales and service will diminish in the foreseeable future”.

“But we’ve been getting ourselves a bit match fit for some of these unexpected scenarios, and we’ll have to navigate it as best as we possibly can with clear, fast, decisive decision planning for the worst but hoping for the best,” he said.

“And so far, that’s working for Audi Australia, and we’re quite confident we can navigate through this storm and come out the other side strong and take advantage of when, where, and how much the market bounces back in the foreseeable future.”

The Audi Australia chief was quick to warn, however, that these are unprecedented times with no promise or guarantee of a resumption of normal business any time soon.

“No one knows how long this scenario will go on, right up to the highest authority in the country being the government,” he said. “They’re unsure what the best or worst scenario will be, and so are we, quite frankly.

“We’re planning numerous scenarios working with dealers and Audi AG to work through what would be the most likely scenarios.

“But responsible management of our business and responsible management of our business partners – particularly our dealers – is absolutely key, and the actions we take now will be remembered long after this period passes … and that remains our sole focus, getting that bit right.

“We’ll keep planning for the worst scenario and hope for the best.”

Mr Sansom was also quick to point out the continuing prioritisation of the health, safety and security of personnel, as well as those of customers and dealers, during the pandemic.

“We’re preparing our business with a few priorities in mind, first and foremost with our people and staff, making sure they’re secure and safe, and that extends out to our dealer network as well,” he said. “Staff and customers are our foremost priority during this period.

“Secondly, we have to shore up our retail operations and our own business at Audi Australia, and all of those priorities are running in conjunction with each other and working at a pace on all of those.

“The role of our leadership is to put our health and safety of our people and our customers first, to shore up the business to navigate a downturn for no matter how long it will go for.

“But we’ve got to hope that the measures that the government is taking, the strong measures and the strong support they’ve got available to all businesses across Australia, are going to be sufficient to navigate through this next period.”

Mr Sansom said Audi Australia was also receiving strong support from parent company Audi AG, despite the impacts of the pandemic running much deeper in Europe.  

“They know the situation even better than us I’d say because they’ve had an even stronger impact of (COVID-19) in Europe,” he said.

“We’re in constant contact with our parent company in Germany, and we’re monitoring advice from them where they’re able to share the experience of other markets who are at different points in the cycle of the virus around the world – whether it’s the US, China or Europe – and that’s invaluable.

“We have regular weekly calls using Skype to understand what is happening in different markets, learning from each other and sharing best practices.

“Audi AG is obviously following proper protocols in their own business and they’re certainly very supportive of their markets because every market is at different stages with different rules and regulations being imposed by the governments.

“Of course, we’re also monitoring advice from other areas such as the World Health Organisation and clearly the Australian authorities, in which we’re in regular dialogue with and regular understanding of everything that we need to do to play our part in managing the crisis in this market.”

With so much uncertainty amidst the new-model rollout, Mr Sansom said sales forecasts were futile at this stage.

“I honestly don’t know,” he conceded. “I’m not a betting man and these odds are really long at getting it all right at this moment, but it’s still relatively early in the cycle, and depending on how well Australia responds to the measures the governments have imposed, it just depends on how soon there could be signs of recovery.”