Strong Dollar Against the Euro Not a Good for North American Audi Factory Prospects
by, 06-30-2010 at 11:57 AM (9964 Views)
Audi has made no secret of its intent to substantially grow brand sales and improved sales in the North American marketplace has always been a key component to such a strategy. Audi executives have readily admitted that they were examining the idea of a North American production facility be it part of the new Volkswagen Chattanooga plant or something different but a recent week falling Euro seems to have changed all that according to reports we've found from several reliable sources.
Audi AG board member Michael Dick recently told Automotive News, "U.S. production doesn't pay off at the current dollar exchange rate."
Further, Audi AG boss Rupert Stadler said to Automobilewoche that a US factory was an unnecessary component in Audi's move to reach sales of 1.5M by 2015. If such a plant were needed Stadler went on to say that he could begin production in an existing facility within six months but that an all-new factory would require three years. Whether or not such an existing facility would be Chattanooga or the purchase of another plant from one of the Volkswagen Group's competitors was not specified.
So What Do We Think?
In the end this is all about exchange rate. The US dollar has been trending lower than the Euro for quite some time and the two have come more into line due largely to the financial crisis in Greece. Clearly Audi will utilize existing facilities owned by the Volkswagen Group if the economies are right.
But what if Audi did begin production in America? What would they build?
Our best guess at an American-built Audi would be A3. Initial logic would dictate A4 and Q5 as these are American volume models but Chattanooga is the most likely scenario here and every rumor about the next generation A3 suggests a B5-sized sedan is in the works. Such a car would likely do quite well in the USA and especially if said car is competitively priced.
The Motor Trend report on this (linked below) suggest that Audi and VW are moving away from shared platforms but that is really a half truth. The VW sedan planned for Chattanooga would certainly be considerably more different in components and structure than past A3 models have been with say a VW Golf, but the group's new modular architectures (MQB in this case) allow for such flexibility and yet share some components and, more importantly, even a production line.
Read more about this subject via several links below.
Full Story - Motor Trend
Full Story - Chattanooga Times Free Press
Full Story - Automotive News (subsciption required)