Speech at the 127th Annual General Meeting of AUDI AG
Prof. Rupert Stadler
Chairman of the Board of Management of AUDI AG
Ingolstadt, May 12, 2016
-Check against delivery-
Ladies and Gentlemen,
Right here, in the Audi Forum Ingolstadt, we experience every day the pleasure that the buyers of new Audi cars experience when they pick them up. That excitement is our driving force. I would like to welcome you all here on behalf of the entire Board of Management and our fellow Audi employees.
At our annual general meetings, we are traditionally available to answer your questions on the past financial year. Also we will give you an outlook on what you can expect from the Audi Group this year. I will come to that in the second part of my speech. But let’s first look back at a challenging year 2015.
The review also includes a situation report on the diesel issue. By means of software manipulation on diesel engines, rules have been broken and ethical boundaries have been transgressed. All of us at the Volkswagen Group sincerely regret what has happened. We are working with all our efforts to restore confidence. That’s only possible with full transparency. And with sustainable solutions: We will put things right!
As soon as this issue became known about at Volkswagen, we at Audi decided to do three things: to clear up the matter at the entire Group; to remedy the situation for our customers; and with a view to our future, to ensure that honesty has the utmost priority as a business principle.
Group-wide clarification is taking place. The Supervisory Board of Volkswagen AG has commissioned an external law firm investigation by Jones Day. That investigation has made good progress. Jones Day expects it to be concluded in the fourth quarter. In the meantime, we are pushing forward with technical solutions for our customers – until the last car has been put right. Our customers have top priority for us.
The Volkswagen Group has submitted retrofitting plans to the German Federal Motor Transport Authority for the four-cylinder TDI engine in Europe. For technical reasons, that has been done in groups, each relating to several models. The Federal Motor Transport Authority has granted its approval for the first groups. Therefore we have already started with the global recall of the 2-liter TDI engine in the Audi A4, A5, A6 and Q5 – with the exception of Northern America. Other countries, amongst them 27 EU member states, are taking this decision as a benchmark.
About 90 percent of all the affected Audi models have 2-liter TDI engines. They will be given a software update, which will take about ten minutes. The other 10 percent of affected models have the 1.6-liter TDI engine. They will be upgraded with both software and hardware. For our customers, that means a short visit to the workshop of less than an hour.
We will probably be busy with refitting the affected models in Europe until the end of the year. For the United States, Volkswagen, as the company responsible for developing the four-cylinder TDI engines, is currently consulting with the authorities in order to determine the ongoing measures. An important step has been taken with a fundamental agreement. The court has demanded absolute confidentiality for the proceedings. I therefore request your understanding: We cannot yet communicate on this today. I can just say so much: Audi is affected in the United States with approximately 13,000 cars. The costs of fixing those cars will be borne by Volkswagen.
What about the 3.0-liter V6 TDI engine developed by Audi? In Europe, the engine complies with type-approval requirements. Nonetheless, together with other carmakers, we have promised the Federal Motor Transport Authority that we will carry out a software change. With this voluntary service action, we are dispelling the last doubts of the investigative commission. The cars of the approximately 60,000 affected Audi customers can have their software updated the next time they are serviced.
For North America, we have presented CARB and EPA with technical solutions, which are now being examined by those authorities. As a consequence, we placed a non-recurring cost affecting income of EUR 228 million in the past fiscal year to cover financial expenditure for technical solutions, legal risks as well as measures directed specifically at our customers and the dealers.
Ladies and gentlemen, our US colleagues and our dealers continue to fully support our brand. They are working for Audi with their full efforts every day. And they are doing a good job. Since 2008, the US dealers alone have invested more than a billion US dollars in our brand. They plan to invest a similar amount again by 2020, and they look to the future with full confidence. That is based on the large number of models we are currently launching. And our US dealers are convinced of our strategy.
Also for our American customers, Audi has not lost any of its appeal. For them, Audi is the “best car brand of 2016”. That’s the result of the latest “Consumer Report.” First place for all Audi models without exception in the categories of customer satisfaction, reliability, road test and safety.
People continue to be convinced of Audi not only in the United States, but also in many other markets. The Audi A3 Sportback*, A4 Avant* and A6 Avant* currently have been voted “Company Car of the Year.”, the Audi R8 is “World Performance Car 2016.” And we recently gained eight first places in the readers’ survey of Germany’s Auto Bild magazine for the “Best Brand in all Classes.” Audi is regarded as the most innovative premium brand of 2016. And first place in the “Connected Car” category of the 2016 Automotive Innovations Award shows that we are on the right track to prepare ourselves for the future.
Despite all the challenges – political crises in Russia and Brazil, currency turbulence and economic fluctuations in China – our business is still strong. We set a new record for deliveries of Audi automobiles last year, selling 1.8 million cars worldwide. That’s 300,000 more than we had targeted in our strategy for 2015. And we increased our unit sales in more than 60 markets for a record of 72 months in succession.
In our income statement for last year, we present our earnings before and after special items. This, in an absolutely transparent manner, allows to assess the Group’s actual profitability as solid. Notwithstanding all expenses, our business operations are in excellent health. In 2015, we achieved an operating profit before special items at the prior-year level; it amounts to 5.1 billion euros. After deducting special items, it amounts to 4.8 billion euros. My colleague Axel Strotbek will soon explain to you the financial results in detail.
Ladies and gentlemen, let’s have a look at Audi’s major sales regions. In the United States, the investment in our brand continues to pay off. As you see, we grew twice as fast as the market in 2015; our sales in the US increased by 11 percent to exactly 202,202 automobiles. We have doubled our unit sales in the United States within five years.
In Europe, we confirmed our position as the premium-market leader. We achieved growth of almost 5 percent to nearly 800,000 cars sold. We performed well in Germany, our domestic market, where we are the number one. In France, we grew by a good 5 percent. In Italy and Spain, we actually achieved double-digit growth. And with 166,000 cars delivered, Audi UK made a substantial contribution to our sales growth in Europe. Every fifth Audi sold in Europe goes to the United Kingdom.
In addition to Europe, we were the undisputed number one in the premium segment also in China in 2015. With more than 570,000 automobiles delivered, we continue to achieve very high sales there. 2015 will be recorded as a special year for the Chinese economy. Many of our customers there were unsettled by uncertainty in the real-estate marketand equity-price fluctuations on the stock markets. There was concern worldwide that China’s dynamic growth might slow down significantly. This would also have grave consequences for the entire automotive industry. However, we regard a massive slow-down as highly improbable. Overall demand for cars in China, our most important single market, had already stabilized by the end of 2015.
As the longstanding market leader, we decided at an early stage on a year of consolidation in China in 2015. This meant continuing our focus on customer satisfaction and profitability. Our Chinese product portfolio is about to go through a transformation. Since the beginning of this year, we have been replacing models that make up a large proportion of our unit sales in that market. To sum up: China is and will continue to be a very solid growth market in the long term – with great potential for the Audi brand.
Ladies and gentlemen, last year we launched twelve Audi models on the market – either new or upgraded – above all the Audi A4* and the Audi SQ7*, crucial drivers of growth, which you can see here on exhibit. Their launch in many international markets will further push this trend.
The super sports cars from Sant’Agata Bolognese are also well known for their power and acceleration. Lamborghini has posted nonstop growth for five years now. In 2015, our Italian subsidiary for the first time passed the mark of 3,000 cars delivered to customers: a substantial increase of 28 percent compared with the previous year. The Lamborghini Huracán* is responsible for a large part of that success: More than 2,200 fans became delighted owners of the new model in its first full year.
You see, the bull is stronger than ever. The brand’s unit sales have doubled since 2005. Lamborghini has created about 500 permanent jobs in the past five years. And we are currently doubling the floor space of the plant in Sant’Agata Bolognese to 150,000 square meters and creating another 500 new jobs.
Ducati, our other Italian subsidiary, also set a new record for unit sales in 2015. Our colleagues in Bologna for the first time passed the mark of 50,000 units in one year – and by a significant margin, with deliveries of almost 55,000 Ducati motorcycles. That’s approximately 10,000 more than in 2014 – an increase of 21.5 percent. Ducati grew significantly faster than the overall market in 2015 and continues to strengthen its position as a top premium brand.
The new Ducati Scrambler was responsible for a large part of that success, with sales of more than 16,000 units in its first year. So the Scrambler got into the list of the world’s top ten bestselling bikes right from the start. More than 700 Ducati dealers in 90 countries are involved in that success, as well as the 1,500 employees worldwide.
Ladies and gentlemen, 85,000 people all over the world work untiringly every day for the Audi Group – now in particular helping us to achieve our ambitious targets with passion and loyalty. In 2015, we brought about 7,500 new employees on board, mainly at AUDI AG and Audi México. In Germany alone,
we recruited more than 4,000 people, including about 1,600 experts with expertise in digitization and electric mobility. For our system of dual occupational training, we were selected as “Germany’s best occupational trainer 2016” in the automotive industry.
The proportion of young women amongst our apprentices continues to rise and was about 30 percent last year. We systematically support our next generation of skilled workers and are therefore increasing the number of apprenticeships we offer by another ten percent.
Before I pass you on to Mr. Strotbek, it’s important to me at this point to say thank you – to all of our employees at our sites all over the world. It’s the people who make a company’s success possible.
We have a highly motivated team and a company with a solid foundation. That’s why I’m convinced: Together, we will make sure that the brand with the Four Rings continues its success in the future.
Speech at the 127th Annual General Meeting of AUDI AG
Member of the Board of Management of AUDI AG,
Finance and Organization
Ingolstadt, May 12, 2016
-Check against delivery-
Ladies and Gentlemen,
I too would like to welcome you to the 127th Annual General Meeting of AUDI AG in Ingolstadt.
In 2015, we were confronted with challenging circumstances in car markets worldwide, including the slowdown of China’s economy, more intense competition in a number of core markets and the diesel issue in the VW Group.
Given these conditions, our 1.8 million deliveries to customers of the Audi brand represent not only a new sales record – but also fresh proof of the strength of the Audi brand. We have launched the biggest investment program in our company’s history and are in the midst of a far-reaching model initiative. We are focusing intense efforts on important future technologies as well as on expanding our worldwide production network.
In this context, the Audi Group put in a solid performance in financial terms as well in 2015.
I would now like to provide you with a detailed overview of our key financial performance measures – starting with the Income Statement.
The Audi Group also set a new record for revenue in 2015, with a total of EUR 58 billion. That figure is up 8.6 percent on the previous year. The main revenue drivers were the healthy sales performance of the Audi brand worldwide, together with positive exchange rate effects.
In terms of deliveries, the North America region achieved a notable performance with growth of 11 percent. In Western Europe, we led the market with a sales increase of 6 percent overall.
Despite the economic upheaval, we succeeded in defending our market position in China, with deliveries matching the previous year’s level. China remains our most significant single market and still offers good growth prospects.
In 2015, demand was especially vigorous for our SUV models, the redesigned A6 car line and the A3 family. The launches of the new-generation A4 and Q7 also provided important impetus within our broad-based product initiative.
The Ducati brand established a new revenue record in the Motorcycles segment of EUR 702 million.
Now let’s delve deeper into the Income Statement, which clearly demonstrates the growth trajectory of the Audi Group: There was a growth-led increase of around 6 percent in the cost of goods sold, taking the total to EUR 47 billion. Audi Group gross profit climbed to
EUR 11.4 billion. Also driven by growth, our distribution costs rose to EUR 5.8 billion.
The main reasons for this development were the higher volume of deliveries and upfront spending in preparation for the market launch of new models. Higher marketing costs – primarily due to the market situation, increasingly intense competition and the large number of model changes, including that of the Audi A4 – and exchange rate factors also had an impact on our distribution costs.
Administrative expenses went up by EUR 53 million to EUR 640 million. This also includes personnel costs for our new plant in Mexico. We are providing intensive training and qualification measures for our new colleagues there in preparation for the production start of the new Audi Q5.
The other operating result came to minus EUR 119 million for 2015. As in previous years, this reflects the impact of currency hedging. In 2015, this position was dominated by significantly higher expenditure for the settlement of foreign currency hedges. Together with the influence of positive exchange rate factors on revenue I mentioned earlier, we nevertheless benefited on the whole from exchange rate effects.
The bottom line is that the Audi Group achieved an operating profit of EUR 4.84 billion – around 6 percent down on the previous year. Let me say a few words about this:
As a consequence of the diesel issue, there was a non-recurring cost affecting income of EUR 228 million in the past fiscal year. This covers financial expenditure for technical solutions, legal risks as well as measures directed specifically at our customers and the dealers.
A few weeks ago, we also announced the precautionary recall in North America of vehicles fitted with driver airbags made by Takata. To ensure the safety of our customers, the vehicles involved need to be brought into the workshop as a precautionary measure. We have set aside provisions affecting income amounting to EUR 70 million for this.
If we strip out these two special items, we achieved an operating profit of EUR 5.1 billion, almost on a par with the previous year’s level. One more brief remark in this connection:
The figures I have quoted do not include the result for our Chinese partner company FAW-VW, which is consolidated at equity and reported pro rata within the financial result of the Audi Group.
Now let’s take a look at the key drivers of the profit performance: As in previous years, the positive sales performance by the Audi brand was a major success factor. On top of that, exchange rates were in our favor in 2015. Further process and cost optimizations along the entire value chain also had a positive impact on operating profit.
On the other hand, very intense competition reduced profit. We continue to spend with an eye to the future. As a result, our high capital investments, which are aimed at further growth, and investment-related expenditure initially had a negative impact on our profit performance. I have already mentioned the impact of the special items on profit.
Ladies and Gentlemen, dear Shareholders: The key financial ratios in the Income Statement clearly reflect the growth trajectory of the Audi Group. And they also demonstrate that we at Audi are focused on the future. 2015 saw us concentrate intensively on upfront spending for qualitative growth, and as a result, we have charted a clear course for the future.
The profit performance in the motorcycles segment also merits a few words: The Ducati brand increased its operating profit to EUR 54 million. That is a 12.5 percent increase. The growth in deliveries to customers played a key role in this achievement. For example, Ducati scored a big hit last year with the new version of the legendary Scrambler.
Mr. Stadler has already mentioned the positive development of our other Italian subsidiary, Lamborghini. Between them, the two brands are making a big contribution to the success of the Audi Group’s operations.
I would now like to take closer look at the financial result of the Audi Group. The decline in the financial result to EUR 448 million is mainly attributable to the reporting-date-based measurement and settlement of foreign currency hedging transactions. The result from investments, including those accounted for using the equity method, remained stable. The share of the income included here from the Chinese partner company FAW-VW was maintained at the previous year’s level, despite the challenging market situation in China.
We achieved a profit before tax of EUR 5.3 billion. Our key rate of return ratios highlight the strong profitability of the Audi Group: With capital investments and upfront spending on future topics remaining high, we again achieved an operating return on sales of 8.3 percent – within our ambitious strategic target corridor of 8 to 10 percent. After adjustment for the special items I discussed earlier, our operating return on sales came in at 8.8 percent, in the middle of our strategic target corridor. Overall we again achieved a high return on investment, at 19.4 percent.
Let us now turn our attention to the development of key balance sheet ratios as of December 31: The equity of the Audi Group rose by 13.4 percent to EUR 21.8 billion. In conjunction with the profit transfer, we subsequently received a capital injection by Volkswagen AG. The amount of EUR 1.6 billion reinvested in strengthening the equity base represents 50 percent of the transfer of profit for the previous year.
The balance remaining after the transfer of profit in the 2015 fiscal year increased our retained earnings by EUR 1.5 billion. On the other hand, measurement effects to be recognized with no effect on profit or loss under IFRS rules reduced our equity by EUR 572 million. These include the measurement of currency hedging transactions, pension obligations and the associated deferred taxes.
Our equity ratio was 38.4 percent, actually a slight improvement on the prior-year figure. Likewise on the equity and liabilities side, borrowed capital rose by EUR 3.4 billion to EUR 35 billion mainly as a result of growth and exchange rate factors.The balance sheet total for the Audi Group consequently rose by 11.8 percent to EUR 56.8 billion.
This now brings us to the financial strength of the Audi Group: Cash flow from operating activities was almost at the prior-year level, at EUR 7.2 billion. Cash used in investing activities for operations rose to EUR 5.6 billion – which was more than a quarter higher.
That can mostly be attributed to higher capital investments for expanding our worldwide manufacturing structures and our product range as well as to the cash portion of the purchase price for acquisition of the participation in HERE amounting to EUR 668 million.
HERE is a provider of cloud-based real-time maps and mobility services. Acquiring this participation represents an important strategic investment.
As in previous years, we financed all operating and strategic investments entirely from our own cash flow. We achieved a substantial surplus with a net cash flow totaling EUR 1.6 billion.
After adjusting for the purchase price of the HERE transaction, our net cash flow of EUR 2.3 billion was even higher and was therefore in line with our forecast. Our high net liquidity of EUR 16.4 billion provides us – as in previous periods – with a more than sound financial base.
In summary, it is fair to say that the Audi Group once again proved its financial strength in 2015.
That brings us to the current financial year and the outlook for 2016. In the first four months we have experienced a 4.9 percent growth in deliveries of cars of the Audi brand. For 2016 overall, we expect to see a moderate increase in deliveries by the Audi brand. With a large number of new models and generation changeovers, we want to build on our success in recent years and expect to perform better yet again than the market as a whole.
In China, for example, we expect the redesigned long-wheelbase version of the A6, the new Q7 and – towards the end of the year – the next generation of the new A4 car line to have a positive impact on demand. And this growth trajectory is not only limited to the Audi brand. We also expect our Italian subsidiary Lamborghini to produce a moderate rise in deliveries. And in the motorcycles segment, we actually anticipate a significant increase in the volume of deliveries.
In light of all this, we expect moderate growth in revenue for the Audi Group in 2016 overall.
Our target for the operating return on sales is again within the strategic target corridor of 8 to 10 percent. The return on investment for the 2016 fiscal year is budgeted to come in at between 16 and 18 percent. As in previous years, we intend to self-finance our entire corporate growth, meanwhile targeting a net cash flow of between EUR 2 billion and 2.5 billion.
The Audi Group will continue to make capital investments in its future and in additional growth in 2016. We expect the ratio of capex to lie within the strategic target corridor of 5 to 5.5 percent. The overarching goal of all investment measures is to further extend the strong position of the Audi brand.
With that in mind, we will be making capital expenditure in excess of EUR 3 billion over the course of 2016. Our investment priority is to renew our product and technology portfolio.
To achieve our goal of expanding our product range to around 60 different models by 2020, we will be systematically advancing our model initiative: We have already prepared the production line in Ingolstadt for the arrival of our newcomer, the Audi Q2, which will delight a number of new customers starting in the second half of 2016. We will be completing our new A4 product family and we are looking forward to introducing the second generation of our highly successful A5 car line.
We are proceeding systematically with the expansion of our range of drive concepts as well, and are gradually electrifying our model range: Our focus is in particular on plug-in hybrid technology and on all-electric drive.
Another key focus of our investments is the expansion of our manufacturing structures worldwide. Our plant in Mexico will be going on stream in 2016 with the new Audi Q5. Local production of our popular SUV model will enable us to exploit growth potential in the Americas even more effectively in the future.
Digital technologies are increasingly becoming a core component of our internal processes and production structures. Customers can experience digital technologies in our cars as well as through our services – in the form of significantly enhanced comfort, safety and service. This is a basic requirement that we must fulfill if we are to continue to delight customers with our premium automobiles in the future.
Technologies for digitization are therefore an area of focus for our investment measures. The digital transformation is changing our entire environment and therefore also existing business models. All our future investments will be accompanied by further cost and product optimizations along our entire value chain. We will once again exploit the potential offered by digitization.
Ladies and Gentlemen, dear Shareholders, you will have received our Audi 2015 Annual Report today at the information counter, with its central theme “tomorrow. now!.”
I invite you to discover the future at Audi, starting right now. In this changing environment we are continuing to make successful progress, and we are confident and well prepared to address these challenges.
Thank you for accompanying us along this path.
Speech at the 127th Annual General Meeting of AUDI AG
Prof. Rupert Stadler
Chairman of the Board of Management of AUDI AG
Ingolstadt, May 12, 2016
-Check against delivery-
Ladies and Gentlemen,
Our outlook for this financial year includes a number of negative indicators: The burden resulting from the Diesel issue has not been relieved. Innumerable regional crisis zones continue to affect us. Europe is holding its breath due to the refugee crisis and the threat of the United Kingdom’s exit from the EU. Currencies that are important for our business have become highly volatile and impact our business. Also, the debt crisis in Greece flames up once again. The Chinese market becomes more and more mature and we now experience an even fiercer competition. In short: The framework for our business activities is extremely challenging.
However: We aim to continue our growth in 2016. That’s why our model initiative is continuing. We will launch more than 20 new or revised Audi models by the end of the year: The Audi A3 has been extensively upgraded. We are completing the A4 family with the allroad quattro* and its sporty brother, the S4**. For China, there will also be the Audi A4** Sedan with a longer wheelbase. And we are especially excited about the successor to a coupe design icon: the new Audi A5 coupe** together with its sporty brother, the S5**. In our Q range, the following cars have their premieres this year: first and foremost, the Audi Q7 e-tron*, the Audi SQ7 TDI*, and next to it here in the hall you can see our youngest Q – the Audi Q2**. It is made in Ingolstadt. With its launch in the second half of the year, we will enter a new market segment and open a new door for our customers into the world of SUVs.
After a weaker start to the year, the US economy fortunately presents itself with more confidence again. In China, the latest economic data indicate a different picture of the current situation from that a few years ago. Despite these challenging conditions, we are performing well. In the first few months of the year 2016, we started well. By the end of April, we had 4.9 percent growth in global unit sales compared with the prior-year period. In Europe, we actually achieved a year-on-year increase of 7.8 percent.Our new Audi A4 is responsible for a lot of that growth. Unit sales in the United States of America are up by 5.0 percent. In China, we have an increase of 5.9 percent – despite the current model changes.
Our “model athletes” are quite clearly our Q models. At Audi, we are experiencing worldwide growth in the SUV segment of significantly more than ten percent.
So you see, we are on the right track with our new Audi Q7 and with our new urban SUV, the Audi Q2.
And we will present our new Audi Q5 in the second half of the year. The team at our new plant in San José Chiapa in Mexico is working hard on the start of production of this bestseller. Setting up a completely new plant on a greenfield site in just three years with a new team and a new product – that’s a terrific achievement by our team. At that site, we have selected and recruited the 2,000 best-qualified persons from 200,000 applicants. We have signed contracts with approximately 180 suppliers. Two thirds of the components that we are purchasing for the Q5 are sourced in North America. In the medium term, we want to localize significantly more, thus counteracting currency fluctuations.
And now to Italy. At Lamborghini, we will produce the super-sports car in the SUV segment as of 2018. This third model series will secure significant growth and give us more financial stability. That’s why we are investing there, with the following goals: Passing the revenue mark of one billion euros per annum fairly soon, and selling more than 4,000 Lamborghinis each year.
And now to Ducati. Or “La Rossa di Borgo Panigale” as the Italians say. This brand with a great tradition will present nine new models this year. Let me mention three of them: The XDiavel, a cruiser model that will support further growth, especially in the North America region. In the voting on “Motorcycle of the Year 2016,” this important model has just gained first place in the “Chopper and Cruiser“ category. A great start! With the Multistrada Enduro, Ducati is entering a new segment: The Multistrada Enduro is the new motorcycle for off-road adventure. And the Ducati Scrambler Sixty2 is an even lighter scrambler with a more compact, 400-cubic-centimeter engine.
From our Italian “daughter companies” to our domestic sites. In the surroundings of Ingolstadt, we established a center of competence for battery technology. To further enhance the deployment of electric mobility, we focus dedicated know-how, from cellular chemistry to the final assembly of high-voltage batteries.
In Neckarsulm, we are making preparations for our new flagship. We will present the new Audi A8 in 2017. We have just opened the new production facility. The production of the new A8 is as pioneering as the car itself. Driverless transport systems operate as a swarm. This makes us more flexible, increases our efficiency, enhances quality and makes our employees’ work easier.
Ladies and gentlemen, Audi will soon be 107 years old. And it feels as though we are starting again from scratch. Our entire industry is in an historic transformation. New competitors from the IT sector are participating. Those companies are moving fast – and they are not worried about making losses.
Digitization opens up completely new opportunities for us. That is, for the next major innovative leap, because Audi will continue to stand for “Vorsprung” in the future. We are well known for often thinking differently, outside the box. We find solutions for the megatrends of our society – for the following challenges for example: making the car into the most desirable digital device, supporting climate goals with a sustainable product range, and shaping mobility for the city of the future. In brief: We reinterpret the mobility of the future.
In this context, I will present to you three focus areas of innovation: digitization, sustainability, and urbanization. Firstly: We will create a central digital platform for mobility. Already today, 90 percent of our innovations are based on electronics, sensors and digital assistants – resulting in more driving intelligence. “Vorsprung” means utilizing the potential of digitization. Let’s take the example of assistance systems.
The new generation of driver assistance systems is predictive. It uses information that the driver cannot yet have. Before a traffic jam occurs, your navigation system is already planning a new route in the background. Before you drive over the crest of a hill or into a dangerous bend, your car knows about an accident there or an oil slick.
In a unique transaction, we acquired HERE, the digital mapping business of Nokia, together with BMW and Daimler in 2015. HERE is the global market leader amongst the providers of maps exact to a few centimeters. The data of HERE will be updated in real-time. The maps will then include not only geographic information, but also for example, data on the road surface, the weather and danger spots. The vision is a real-time reality index of our modern world. This is about far more than mobility. This is about the Internet of things and services.
Our assistance systems will only be able to act predictively when real-time information flows directly into them. Because they will use not only their own sensors, but also those of all the other cars around them at the same time. We will carry out the first field tests this year. Only on our platform can we guarantee our customers that their data is in good hands. That’s a matter of trust.
People have been trusting us with their personal safety for more than a hundred years. And they have to know that their virtual identity is safe with us as well. Using our platform, we will digitally enhance our customers’ experience. And that goes far beyond the core product. It gives our customers added value and gives us new business opportunities. On the way there, we will set up digital think tanks and will support targeted start-ups.
“Vorsprung” also means performing pioneering work. We have repeatedly demonstrated with spectacular actions since 2009: Audi is the leader for piloted driving. We will soon put this expertise into series production. The next generation of the Audi A8 as of 2017 will master piloted driving up to 60 kilometers an hour, as well as piloted parking.
And I am convinced that we will see fully automated driving by 2025. Our customers will profit from that in the long term. The Audi of tomorrow will be a workplace, a place of relaxation and a place of enjoyment. We at Audi call it the “25th hour.” When the car of the future drives automatically, the people on board will be able to make good use of their time. When cars communicate with each other and with the infrastructure, people will also get to their destinations faster, with less stress, and more safely. All of this will save time. And time is the biggest present that one can give a highly developed society nowadays.
The second milestone is sustainability. The future of mobility is emission-free. Our roadmap for electric mobility is ready. For us, hybrids and plug-in hybrids are both a transitional and bridging technology. Our first fully electric large-series car will go into production the year after next. And we are thinking beyond that: As of 2018, we will launch an electric model every year. And not only in market niches, but also in high-volume segments, in our successful Q family for example. Electric mobility requires an effective charging infrastructure: at least 150 kilowatts, or better 350 kilowatts – for fast charging along the Autobahns.
That’s why we need a global rapid-charging network.
“Vorsprung” means shaping premium solutions for electric mobility. In the future, that will include our customers reserving a place at a charging station while driving. Electric mobility must be seen as a normal part of our everyday lives. Only then will it become firmly established in our society. For us, it is now important to actively and vigorously push forward with this transformation.
At present, we are preparing our production facilities for the next stage of electric mobility. At our site in Brussels, we will begin the large-series production of our first fully electric SUV in 2018. That plant will also produce its own batteries. Audi Brussels will be the pioneer for electric mobility at the Audi Group.
We see great potential also in fuel-cell technology. Our Audi h-tron quattro concept study operates solely on electric power, and with hydrogen as an energy source – hence the name h-tron. The hydrogen tanks can be filled in about four minutes, with enough energy for a range of 600 kilometers. Audi has the leadership for this technology within the Volkswagen Group, and will bring it out of research and towards series development in the coming years.
“Vorsprung” means performing best practices even better. So striving for efficiency and sustainability includes the entire Audi world. We have already taken a large step in that direction: We have equipped more than seven million cars with quattro – our system of permanent all-wheel drive – and now we are making it even more efficient. As of mid 2016, we will launch quattro with ultra technology in the new Audi A4 allroad. This drive system thinks for itself and ensures maximum efficiency. It is always ready – permanently available. When quattro isn’t required, the Audi operates with front-wheel drive. That reduces fuel consumption and thereby emissions by 4 grams of CO2 per kilometer.
And our most powerful Q model, the Audi SQ7 TDI, has a 48-volt power system. That allows the use of an electric compressor, giving the car its exceptional acceleration.
The third milestone of our strategic roadmap until 2025 is urbanization. Individual mobility will be connected with the city of the future. Space is scarce in metropolises. The United Nations have calculated that up to three quarters of humanity will live in cities by 2050. Mobility providers will need to offer solutions to that in the future. Some urban customers primarily want to use a car, not necessarily to own one. The city of the future therefore needs new premium ideas on sharing. With conventional car sharing, the cars are parked just anywhere, or at specified pickup points. With us, they are provided by a concierge, like in a pilot project that has been running in San Francisco for the past year. Or in the not-too-distant future, they will drive to the customers in piloted mode.
Our premium mobility services always add value: For example, the current “Audi select” offering targets customers who like to drive several Audi models throughout the year, alternating and one after the other.
We are currently supplementing this variable usage model with three Ducati motorcycles. With the Scrambler, the Panigale and the Multistrada, Audi customers may switch over from four to two wheels. All in all, we provide a service according to the motto, “an Audi WHERE and WHEN I want” – “Audi on demand.”
At the core of this new mobility offering, there will be an app. It will allow Audi customers to get the desired car delivered to the desired place at any time. Our customers are already using an early version of this app to locate and lock or unlock their Audi Q7 or A4 using their smartphones.
“Vorsprung” means understanding the logic of the megacities. Whoever understands the city of the future will hold its golden key in his or her hand. That’s why we’ve been studying urban mobility since 2010. We have now turned this successful research project into the Audi Urban Solutions consultancy. We are involved in several urban-development projects in Somerville near Boston, in Mexico City and in Ingolstadt.
We are combining all of our know-how and developing it further – from assistance systems for the city, to mobility concepts for flexible use and intelligent data analysis.
Whoever explores new territory requires the curiosity to discover new pathways. That is exactly what’s special about us at Audi. The most attractive automobile brand will be the one that helps to shape the future. Let me summarize how I see Audi in 2025: The “new premium” is digitally connected, efficiently and emission-free, and embodies the urban lifestyle of our customers. That’s how “Vorsprung” will be measured in the future.
Juergen De Graeve
Tel.: +49 841 89-34084
Fuel consumption figures of the models named above
The fuel consumption and the CO2 emissions of a vehicle vary due to the choice of wheels and tires.They not only depend on the efficient utilization of the fuel by the vehicle, but are also influenced by driving behavior and other non-technical factors.
Audi A3 Sportback:
Combined fuel consumption in l/100 km: 8.3 – 3.8
Combined CO2 emissions in g/km: 154 - 99
Audi A4 Sedan:
Combined fuel consumption in l/100 km: 6.3 – 3.7
Combined CO2 emissions in g/km: 144 – 95
Audi A4 Avant:
Combined fuel consumption in l/100 km: 6.4 – 3.8
Combined CO2 emissions in g/km: 147 – 99
Audi A4 allroad quattro:
Combined fuel consumption in l/100 km: 5.5 – 5.1
Combined CO2 emissions in g/km: 146 – 137
Audi A6 Avant:
Combined fuel consumption in l/100 km: 7.8 – 4.4
Combined CO2 emissions in g/km: 182 – 114
Audi SQ7 TDI (5 Seater):
Combined fuel consumption in l/100 km: 7.5 – 7.2
Combined CO2 emissions in g/km: 198 – 189
Audi Q7 e-tron 3.0 TDI quattro:
Combined fuel consumption in l/100 km: 1.9 – 1.8
Combined CO2 emissions in g/km: 50 – 48
Combined fuel consumption in l/100 km: 12.3 – 11.9
Combined CO2 emissions in g/km: 285 – 278