Articles by Vanessa Fuhrmans

For decades, Audi has played the poor cousin to Germany's luxury-car kingpins. Now the carmaker, owned by Volkswagen, is doing what was unthinkable years ago: it is running neck-and-neck with BMW for the crown of the world's top-selling luxury maker, thanks in no small part to surging US sales. Audi yesterday forecast increased sales worldwide this year -- after outpacing Daimler's Mercedes-Benz with 1.46 million cars sold globally last year -- and said it remained on track to reach its target of more than two million in annual car sales by 2020. Though its net profit last year slipped 2 per cent to E4.35 billion ($5.5bn) due to new model investments and Europe's dismal auto market, its 11 per cent operating margin bested BMW and Mercedes's recent profitability. Six years ago, Audi trailed both of its German rivals in sales and cachet, and nowhere more so than in the US. Since then, it has nearly doubled its US model line-up and prodded its American dealers to invest some $US206 million in sleek and airy new showrooms over the past three years. Audi has crafted an image as the upstart alternative to its more premium rivals, tapping into a luxury ethos that has favoured the high, yet minimalist, design typical of Audis. "We have put a lot of work in recent years toward winning over the US,'' said Audi chief executive Rupert Stadler. The strategy appears to be working. Worldwide, Audi's sales in the first two months of this year are up 10 per cent to 221,800 cars -- 400 short of BMW-brand car sales. Some of Audi's biggest growth is coming from the US, where sales have climbed 17 per cent so far this year and its share of the luxury-import car market has nearly doubled to 10.1 per cent, from 5.8 per cent in 2006. The Bavaria-based carmaker's US sales are still about half those of its German rivals. But Audi is within reach of a critical goal -- boosting its annual US sales by more than 40 per cent to 200,000 cars by 2018, a target the company's US chief, Scott Keogh, argues it is likely to reach "sooner rather than later''. A few years ago, "when Audi announced its 2018 numbers, I rolled my eyes'', said Mike Sullivan, an Audi dealer in California, who as the owner of 10 other dealerships had heard lofty sales goals from carmakers before. Last year, though, Mr Sullivan spent nearly $US24m to construct a massive glass-walled, 17-car showroom -- the largest Audi dealership in the US.  Elsewhere in the world, Audi is much more established. It is the biggest luxury carmaker in China, thanks to its move to produce cars there in 2001, years before its rivals. Its first-mover status has allowed it to become Communist Party functionaries' ride of choice. In Europe, it also has become the top-selling luxury brand. Audi's growth is key to its parent Volkswagen's own ambitions to become the world's largest carmaker by 2018. It's also arguably Volkswagen's key profit driver, contributing nearly half its E11.5bn in operating profit last year. The benefits are mutual: a big reason for Audi's high profitability is its ability to share technology and platforms with the bigger Volkswagen group, which includes brands from Porsche to Bentley to Skoda. To reach its US sales goal, Audi is breaking ground this year on its first North American plant in Mexico, where it will begin producing its Q5 sport-utility vehicle in 2016, much of it for the US. Just as critical, Mr Keogh said, would be maintaining Audi's edge with luxury-car buyers in their 20s, 30s and early to mid-40s -- whose numbers rival the size of the baby-boom generation. That cohort already makes up nearly 48 per cent of Audi's US customer base, compared with 45.8 per cent for BMW, 34 per cent for Mercedes and 18 per cent for Toyota's Lexus luxury brand, according to research firm Strategic Vision. These buyers' preferences are shaped as much by Apple iPhones as high-performance cars, and many of them have been drawn to the understated lines of Audi's design and details such as the cars' hi-tech multimedia systems. Audi's US gambit isn't without risks. US luxury buyers have proved to have fickle tastes before: witness the fall of the Lexus, which was the top-selling luxury car in the US for 11 years before 2011. Both Mercedes and BMW are also aggressively trying to court younger buyers with new, lower-priced models. Mercedes is making an especially concerted effort with a compact sports sedan that it will launch later this year.