|Founded||July 16, 1909|
|Revenues||$55.7 billion (2020)|
|Profit||$4.5 billion (2020)|
|Competitors||BMW, Tesla Motors, Lexus, Honda, Porsche, Ferrari, Jaguar, Mercedes, Bentley|
Audi AG is one of the world’s leading producers of premium cars and it is part of the German company, Volkswagen. It is known for its collection of sporty vehicles with high build quality and progressive design. When Augusto Horch established the company in 1909, he named it ‘Audi’ based on the Latin translation of his last name, which means “listen!” Shortly after it was established, Audi became popular even on the international scene. Two of its popular cars are the Audi Type C 14/35 PS (Alpine Victory) and the Audi 14/50 Type K, which was the first left-hand drive car. In 1932, three other companies merged with Audi to form the Auto Union AG. The four rings of the Audi badge symbolize the union (My Auto World). Today, AUDI AG continues to play its role in transforming our lives into the new age of mobility. Despite the global health crisis, they announced that they have over 100 markets, more than 87,000 employees worldwide, and around 1.6 million deliveries in 2020. For the same year, their sales revenue amounted to $55.7 billion and the operating profit before special items reached $4.5 billion.
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Audi Strengths 2021:
- Product Development.
A $27 billion investment by Audi is said to focus on product development, innovation, and technology. They plan to create economical combustion engines and alternative efficiency technologies to limit carbon dioxide. They want to introduce new features in areas of connectivity and driver assistance, as well as develop new cutting-edge technologies. Audi prioritizes sustainable growth, which means more exciting innovations are to be expected from them (White, 2020).
- Brand Image.
Audi brand is a household name in the luxury department. The marketing team behind the brand carefully picked its partners and media channels while putting emphasis on its progressive messaging and car technology. Due to this, its brand awareness boosted to 83% in 2018 (Adams, 2019). It was included in Forbes’ World’s Most Valuable Brands 2020.
- Digital factory Initiative.
Audi recently announced that they are launching the ‘Automotive Initiative 2025’where digital solutions for vehicle production and the supply chain will be tested and developed for use in series production. Technology companies with relevant IT solutions such as Amazon Web Services, Capgemini and XL2 joint venture, and SAP will participate in this initiative.
Audi Weaknesses 2021:
- Diesel emission scandal.
It was 2015 when Audi admitted that the emissions scandal, known as “Dieselgate”, is true. Audi’s 11 million vehicles had a “defeat device” installed to cheat the tests done by regulators to check their emissions level. This manipulation eventually led to lawsuits and compensation payouts (Emissions.co.uk). The issue has not been finalized as the court investigations and hearings are ongoing.
- Car recall history.
Audi has a long history of recalls for the past years. Some cars and SUVs have been recalled for Violations of the EPA Clean Air Act over excessive diesel emissions, while others were recalled for faulty airbag inflators. The 2020-2021 Audi Q7 Recall is due to the potential harm from the passenger airbag, while the 2020-2021 Audi A5 Recall is because the wiring harness for the rear lights might disable the doors from being opened from the outside (Kelly Blue Book).
- Pandemic effect.
The COVID-19 pandemic caused every company to experience setbacks, including Audi. The sales and revenue were down significantly during the first half of last year following a collapse in demand for cars worldwide. Audi delivered 1.8 million in 2019 but delivered only 1.6M in 2020 (Automotive World, 2021).
Audi Opportunities 2021:
- Self-driving cars.
Self-driving vehicles mean that vehicles move on their own without human intervention. Although it was predicted decades ago that self-driving cars will dominate the automotive market by this time, the current technology is not yet ready. However, it is a future technology that is being tested and developed by industry players. Tesla and Ford have semi-driverless vehicles, so they might be able to further develop them (Lau, 2021).
- Promising future of Electric driving vehicles (EV).
According to McKinsey, the future of automotive is electric. The current US Administration targets 50% EVs by 2030. Automotive industry players are working double-time to innovate new concepts of electric, connected, autonomous, and shared mobility. The largest automotive markets will go electric by 2035. Currently, Audi has several electric vehicles and a lot more electric models to develop.
Audi Threats 2021:
- Fuel price increase.
Lower fuel price consequently means consumers would be enticed to drive their cars. Many countries around the globe are experiencing fuel price increase due to surging demand and supply shortages (Haddad, 2021). This might affect consumer-buying behavior as some of them are looking into automotive alternatives such as bikes and electric vehicles.
- Competitive market.
In 2020, the global luxury market is valued at around $410 billion. It is projected to grow at a compound annual growth rate of 5% and might reach $566 billion in 2026. Some of the brands dominating the market along with Audi are Mercedes-Benz, BMW, and Tesla. Each of these brands is investing in other luxury car companies to gain more market share (Mordor Intelligence, 2021). As there is a substantial-good future in automotive and with fierce competition among players, Audi should be prepared more in terms of product development and innovation.
- Product innovations.
The automotive competitive landscape has all brands continuously innovating to be the best among them. Each release is an upgrade to the previous model. They invested big amounts of money for their own product and development department so they can produce a feature that would elevate their position as the leader of the market. The threat right now is which brand would be the first to innovate the self-driving capability to the fullest.
Audi SWOT Analysis Conclusion:
The automotive industry will be more exciting in the future as it collaborates with technology to make life easier for everyone. In the future, we are not left with just the traditional vehicles, but there is an option for electric or self-driving cars. Audi’s advantage is their big investment in product development and digital factory initiative. As the other luxury car brands are also well-known globally, Audi should produce small and big product developments which will elevate their brands to the top. Consequently, they will gain more market share and it will reduce car recalls. Audi is well-known for its style and technology. It is long history of reliability and product innovations are what people look for when buying luxury cars. However, the competition is tight so there is always room for improvement.
- My Auto World. The History of Audi. [online]. My Auto World.
- Audi. Audi. [online]. Audi website.
- Audi, (2020). Audi launches initiative for digital factory transformation in Heilbronn. [online]. Audi Media Center.
- Adams, P. (2019). How Audi shifted gears from being a quiet niche brand to a progressive challenger. [online]. Marketing Dive.
- Volkswagen, (2020). The future on hand Annual Report 2020. [online]. Volkswagen.
- Forbes, (2021). The World’s Most Valuable Brands. [online]. Forbes.
- White, G. (2019). How Audi shifted gears from being a quiet niche brand to a progressive challenger. [online]. Marketing Dive.
- Kelly Blue Book, (2021). Latest Audi Recalls. [online]. Kelly Blue Book.
- Automotive World, (2021). Audi defies the corona crisis with a robust performance in the 2020 financial year. [online]. Automotive World.
- Conzalde, J. et. al. (2021). Why the automotive future is Electric. [online]. McKinsey.
- Lau, A. (2021). Self-Driving Cars FAQ: How Far Away Is Far Away?. [online]. Motor Trend.
- Haddad, M. (2021). How the price of petrol has changed (2001-2021). [online]. Aljazeera.
- Mordor Intelligence, (2021). Luxury Car Market – Growth, Trends, Covid-19, Impact, Forecast. [online]. Mordor Intelligence.