Audi to bring more diesels to U.S. market

Encouraged by healthy U.S. demand for diesel-powered versions of the A3 hatchback and Q7 crossover, Audi will add diesel powerplants to the A8 and A6 sedans and the Q5 crossover within the next 24 to 30 months, Audi of America Inc. president Johan de Nysschen said Tuesday.

Also, Audi will decide before the end of 2015 whether to set up a U.S. manufacturing plant, de Nysschen said.

Audi's U.S. sales are forecast to exceed 150,000 units by the second half of the decade, giving the brand the volume it would need to justify manufacturing in the United States.

"We have to earn the right to set up a manufacturing plant in the U.S. It is volume determined," de Nysschen said in a Web cast summing up Audi's 2010 U.S. performance. "You need a critical mass in order to justify investment in the plant."

De Nysschen did not say whether Audi would build a factory or share the VW brand's new plant in Chattanooga, where the all-new Passat designed for the United States is being built.

De Nysschen forecast Audi will sell 114,000 vehicles in the United States this year, up from 101,629 in 2010. The sales increase will be driven by demand for the new-generation A8 flagship sedan launched late last year, the all-new A7 coupe and the redesigned A6 due later this year, he said.

De Nysschen said Audi expects U.S. sales to reach 130,000 to 140,000 by mid-decade.

Audi's growth in 2011 will be constrained by limited supplies because of high worldwide demand. According to the Automotive News Data Center, Audi had a 28-day supply on March 1.

"We have become the victims of our own success," and because of the shortage of vehicles "we have not attained all the retail sales opportunities we have had available to us," he said.

In the U.S. market, supplies of the Q5, Q7, A3, along with diesel versions of the Q7 and A3, are especially tight.

Audi is ramping up production but de Nysschen said he did not expect inventories to improve until "towards the end of the year."

Because of the tight supply, about 25 percent of Audis sold in the United States are presold customer orders, he said.

De Nysschen said Audi will continue to curtail incentives and said its spiffs have been lower than that of its luxury competitors for the past four years. He declined to give internal figures but said Autodata Corp.'s figures show Audi spent $2,700 to $2,800 per vehicle on incentives last year.

"Our quest is not to park an Audi in every driveway," he said, "but in the right driveway."

By Diana T. Kurylko- Automotive News