Audi bets on premium demand withstanding effect of inflation

The main challenge for car makers continues to be the supply of key components, executive says

Quality control checks on an Audi Q4 e-tron electric vehicle at a Volkswagen plant in Germany. Bloomberg
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For most buyers waiting as long as a year for a new Audi, the rising cost of living is not much of a reason to give up on their dream.

Consumer demand is holding up, and the main challenge for car makers continues to be the supply of components, said Hildegard Wortmann, Audi’s chief sales officer since 2019.

She took on a similar role at the wider Volkswagen Group level this year.

“We have a record high backlog and the biggest ambition now is to really produce those cars as quickly as we can,” Ms Wortmann said in an interview in Salzburg, Austria.

“People have a higher willingness to spend in the premium market than in the volume market.”

The comments reflect a market that is still coping with the overhang of supply shortages — even as the rise in energy costs eats into households’ disposable income.

Order books for the Audi brand, though, are full for the next seven months to a year, the company said on Thursday after publishing second-quarter earnings that beat analyst estimates.

Car makers have adapted to supply constraints by focusing on higher-end vehicles, pushing up the average cost of cars sold on the market.

Ms Wortmann’s comments also highlight how inflation — running at a record pace in the eurozone and at a decades-high level in the US — has a different impact on various parts of society.

While governments look for ways to support low-income families contending with soaring living costs, many luxury brands, from make-up to handbags to cars, are in high demand.

Audi hopes an expansion in its electric vehicle line-up will help maintain demand from more affluent buyers.

Updated: July 31, 2022, 3:30 AM
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