Audi, owned by Volkswagen (Xetra: VOW3), logged 2012 net profits that slipped 2 percent to $5.68 billion worldwide, but also recorded an 11 percent operating margin that bested both BMW and Mercedes' recent profitability.
Looking back on data from 2006, Audi still trailed its German counterparts, and by a significant amount, in the U.S. auto market. Since then, Audi has nearly doubled its model lineup and convinced its American dealers to invest some $206 million in sleek and innovative new showrooms.
The strategy seems to finally be paying off as Audi's global sales through the first two months of 2013 are up nearly 10 percent to 221,800 cars — a mere 400 short of BMW-brand car sales. Reports indicate that some of the biggest growth is coming directly from the States, where sales have climbed 17 percent so far this year and its share of the luxury-import car market has nearly doubled to 10.1 percent from 5.8 percent in 2006.
Despite the fact that its sales are roughly half those of BMW and Mercedes in the U.S., Audi has shown significant advancement in the States as it aims to boost sales by more than 40 percent to 200,000 cars by 2018, a target the company's U.S. chief, Scott Keogh, told the WSJ it is likely to reach "sooner rather than later."
In an effort to meet that goal, Audi is breaking ground this year on its first North American plant in Mexico, where it will begin producing its popular Q5 sport-utility vehicle in 2016.
The automaker also has its eyes set on maintaining its target market of luxury-car buyers in their 20s, 30s and early- to mid-40s. The demographic already reportedly makes up nearly 48 percent of Audi's U.S. customer base, compared with 45.8 percent for BMW, 34 percent for Mercedes and 18 percent for Toyota Motor Corp.'s Lexus luxury brand, according to research firm Strategic Vision.
BMW and Mercedes also have marketing campaigns aimed at the younger demographic, with both brands putting out lower-priced models in an effort to make it more affordable for the younger and somewhat less wealthy bracket to gain entry into its vehicles.
Audi, this year, will launch a compact sports sedan that will price at just below $30,000. The idea, according to Keogh, is to get the buyers hooked on the cars so that they become loyal to the brand and aspire to one day be able to drive its higher-end models.
Audi’s more expensive sedans, such as the new S8, which prices at $110,000, now account for one-third of its total sales, compared with 18 percent just two years ago.