Audi CEO outlines huge reset amid price pressure from China
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Audi global chief executive Gernot Dollner has acknowledged mounting competition and price pressure in the premium car market from fast-moving Chinese rivals, as the German brand embarks on a sweeping overhaul of its vehicle development processes intended to bring “China speed” to European car manufacturing.
Audi is being squeezed from two sides in the premium car manufacturing space thanks to tough competition from China, but the brand’s CEO says it will confront the challenge head-on.
“Definitely, we see a decrease in pricing in the market, and that is a challenge for us,” Gernot Dollner told carsales at this month’s international first drive of the RS5 performance car.
“We have to work on it to raise productivity and keep our products competitive.”
According to the Audi boss, who was installed as CEO in 2023, competition is no longer limited to traditional German rivals BMW and Mercedes-Benz. Internally, Audi now sees Chinese brands as credible players in the premium space.
“There will be more competition in the premium segment in the world, and Chinese brands are relevant competitors in these segments,” said Dollner.
The pressure comes from several angles. Transaction prices for some luxury models (particularly EVs) in markets like Australia have softened as brands have increased discounting to shift stock. At the same time, feature expectations have surged, with cutting-edge infotainment, advanced safety tech, long range and rapid charging capability increasingly seen as necessary.
Meanwhile, Audi is observing a split in buyer behaviour, with more customers sampling cars from mainstream segments.
“There is a huge market dynamic in two directions,” said Dollner.
“There are new entrants in the premium segment – that is sure – and the difference between volume and premium is disappearing because technology isn’t that much of a differentiator anymore. Brand becomes more important.”
In Australia, that dynamic is already clearly visible in the electric SUV space where market entrants like the Zeekr 7X and IM6 by MG Motors are launching with exceptionally sharp pricing compared to ‘legacy’ options like the Audi Q6 or Mercedes-Benz EQE SUV.
While there’s only so much that can be done to make today’s Audi models competitive, Dollner is two years into a dramatic plan to comprehensively change the way the Ingolstadt brand plans and builds cars.
The idea is to pinch lessons from China – specifically from Audi’s partnership in China with SAIC – in how to develop high-quality cars cheaper and quicker.
“We call it ‘China speed’ in Ingolstadt,” Dollner explained.
“We completely adapted that to our processes in Germany. Not so far in the future, we will prove that we are able to react as fast as we do in China, but in European programs.”
Central to that transformation are so-called “project houses”, which are teams that integrate engineering, design, testing and validation, procurement, tooling and other experts under one roof for a specific future model.
Project house leaders have direct access to Dollner and the Audi board for rapid idea sign-off, meaning decisions aren’t sidetracked by a bloated escalation process.
“We started to implement project houses, which are absolutely necessary if we want to be that fast. You cut out committees. You have this speedy decision process with very fast involvement with the board,” he said.
Historically, European cars have taken five to seven years to launch after the initial project concept is signed off by top management. China has challenged the status quo by developing the ability to move from platform to derivative in under two years.
Working with its Chinese joint venture partner SAIC, Audi has experimented with that kind of speed with the China-market AUDI E5 from the company’s ‘four-letter’ China market brand.
The E5, which was developed in 18 months, is priced from about $A49,000 in China and is designed to appeal to younger Chinese buyers uninterested in Western cars. But Dollner said there is no plan to bring AUDI to Australia as a cheap alternative to the four-ringed Audi.
For its European-made cars, the broader challenge is structural, with Dollner explaining it faces persistently high energy costs, labour expenses and regulatory burdens while also funding parallel investments in combustion and plug-in hybrid drivetrains.
The Audi boss wants to see European politicians develop a unified approach on car manufacturing competitiveness.
“I hope they understand. It is quite visible what is going on in the world. I hope that we soon will have impact and changes in Europe, otherwise, we will further deindustrialise this beautiful continent,” said Dollner.
For Australian buyers, the implications of Audi’s reset will likely be significant.
If Audi can compress its development timelines and reduce overheads, it should be able to narrow the price gap between where its models sit now and the more affordable entrants from premium Chinese brands – and in-betweeners like Tesla.
Dollner says the first proof point of this new approach will be the production version of the Concept C electric sports car, which shares the modified platform of the planned Porsche 718 EV.
“Whenever we present a new concept, it will always be a serious product. The first proof point to our strategy is the Concept C… and within two years, we will have it in the market.”
A modified version of this article originally appeared on carsales.com.au
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