How slowing EV rollout will save this brand: We examine Audi's plan to put Lexus in its place and challenge BMW and Mercedes-Benz again | Analysis

Audi appears to have avoided a potential sales disaster, despite a decline in buyers.

The German brand has managed to pivot away from plans to push hard into the electric vehicle market, dropping plans to end its internal combustion engine development as soon as next year. This could prove a crucial moment in the brand’s history and allow it to regain lost ground to Japanese rival Lexus.

Audi Australia’s sales are down 16.4 per cent year-to-date, according to data for the first six months of the year, with just 6839 sales between January and June. By contrast, Lexus is up 16.7 per cent, Mercedes-Benz is up 15.9 per cent and BMW is flat at 0.5 per cent up — but the Bavarian brand leads the luxury market.

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Audi has suffered sales declines for all models except the Q7 and Q5 SUVs, the A1 hatch and the very low-volume A7 (just 26 sales year-to-date) so far in 2025. The good news is, much of this decline was anticipated and new models are on the way.

The brand is in the middle of rolling out a new wave of vehicles, either new generation or significant updates, to freshen up its showrooms. This list includes the new versions of the A1, A3, A6 e-tron, Q2, Q4 e-tron, Q5, Q6 e-tron, Q7, Q8 and e-tron GT.

Crucially, while there are new all-electric e-tron models, Audi has quickly changed direction from moving towards going majority electric and instead is adding more plug-in hybrids and continuing to offer petrol and diesel models. This is important as sales of electric vehicles have simply not progressed at the rate brands such as Audi expected when they first announced their electric strategy.

Adapting and not pushing forward with its original EV plans may prove decisive to the brand’s long-term health.

Audi A6 e-tron

The transition between the old and new has been a challenge for the brand locally, leading to the sales drop.

“The thing is we haven't had stock, so that's one of the challenges and that's obviously shown in the volume,” explained Head of Product for Audi Australia, Matthew Dale.

“But with all the new cars coming through we would like to see some growth in those areas where we haven't had stock in those particular segments.”

Audi A6 e-tron

One of the most important new models for the brand is the incoming A5 range, which not only replaces the old A5 but also takes the place of the long-running A4 — Audi’s answer to the BMW 3-Series and Mercedes C-Class.

Dale is confident that this dramatic change, dropping a long-serving and popular nameplate, is deserved given how different the new A4/A5 range is.

“The thing is the car, it almost warrants the A5 badge because it's grown significantly,” Dale said.

Audi A5

“The wheelbase, the length, height, width of the car, its usability as well. It looks like a notchback sedan, but it's actually a lift back similar to the previous A5. But never say never, the nameplate may come back in the future, but at the moment, A5 suits that car because of its size within the segment.”

The challenge for Audi will be winning back buyers who may have left for not only Lexus, Mercedes or BMW, but also the new influx of brands as the Australian market gets crowded with more than 70 car companies.

“ When we look at the Australian market, you're got around 1.2 million vehicles a year, give or take, but it is a saturated market in terms of the amount of brands. And there are new brands obviously coming into the Australian market,” Dale said.

“Where we sit, in the premium segment, it’s remained quite stable over a number of years and the last five years in general. So we're excited and to see opportunity is all the new product coming in. So whilst we've got cars that are nearing the end of their lifecycle, we're coming in with all new generation cars. And I think you see that in the peaks and troughs in terms of volume. So when you've got an aging product portfolio obviously your volume tapers and then your volume will come back with new products. And I think that's our best opportunity, to have all new generation product.”