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Thursday, 10 October, 2002, 04:33 GMT 05:33 UK
Audi takes on VW cousin
Audi A8
The A8: Will it compete with the VW Phaeton?

Nobody doubts that the latest version of Audi's luxury car - on show for the first time at the Paris Motor Show - is a fine car.

Paris Motor Show entrance
Queuing to see the new A8?
The new A8's lighter aluminium space frame will be clad with new aluminium sheets which will cover its new engines, including its top-of-the-range 4.2 litre V8 - which will eventually be supplemented with the option of a 12-cylinder engine on a stretched version of the car.

Drivers of the latest Audi will even be kitted out with electronic keys which automatically unlock the doors and activate the ignition so the engine can be started by pressing a button.

"It's a completely new car," insisted Audi France's product manager, Alexis Fetzer in an interview with BBC News Online.

Originality

But is it?

Despite a facelift which has been widely accepted as successful, the A8 shown to the punters at the Paris Motor Show seems remarkably dated.

At least when compared with its much more original competitor, the Volkswagen Phaeton limousine which was launched at the Geneva Motor Show in March.

Paradoxically, both cars belong to Europe's largest car company, Volkswagen Group.

So there is little wonder that many Audi dealers are disgruntled.

The Phaeton - which will be kitted out with just as large engines, will be just as expensive and just as luxurious - is said to have delayed the launch of the latest A8.

And although the Phaeton will be 600lb heavier than the new A8, both are heavy cars.

The new A8 weighs more than earlier models since its lighter frame has failed to make up for heavier components and electronic gizmos. And, notably, it is heavier than Jaguar's new aluminium XJ.

Titans clash

Worse still, the Phaeton is seen as a threat to Audi's role as Volkswagen's main upmarket brand - leaving its Bentley, Bugatti and Lamborghini marques aside - despite the group's insistence that the two models will not compete.

VW Touareg 4x4
Late arrival for the booming 4x4 market
"The strategy is a bit different and the target is completely different," said Mr Fetzer.

"At Audi, we have the Audi customers who are going to buy the new A8, and at Volkswagen there's a completely new customer coming more from Mercedes."

However, such talk may more be a reflection of hope than reality.

After all, the Phaeton was originated under Volkswagen's former boss, Ferdinand Piech.

And Mr Piech's strategy was to encourage the group's four volume brands - Audi, Seat, Skoda and Volkswagen - "to compete with each other as much as with [other] competitors", automotive sector analysts just-auto.com observed.

New boss

Under its new group chairman, Dr Bernd Pischetsrieder, Volkswagen is about to change that.

"Schooled in the impeccable disciplines of BMW brand management, [Dr Pischetsrieder] has decided that [such internal head-on competition within the group] does not make a lot of sense," according to just-auto.com.

But there is a long way from rejecting an old concept to introducing a new one.

And some industry observers point out that Dr Pischetsrieder, who was in charge of BMW during the Rover years, has a pretty poor track record as a multi-brand manager.

Queried one observer: "He failed at BMW with the Rover brand, so why should he succeed at VW?"

Opportunities

Rather than waiting for industry commentators to agree on whether or not he is up to the job, Dr Pischetsrieder has set out to prove his worth.

As a first step towards reducing the company's model range, Dr Pischetsrieder has decided that loss makers like Audi's little A2 and Volkswagen's little Lupo should not be replaced.

The replacement of key - and sometimes very similar - models like the VW Golf, the Skoda Octavia and the Audi A3 are to be staggered, and they will be altered to make them more different from each other.

The images of Volkswagen's different marques will also be overhauled.

At the Paris Motor Show, the image of the Seat stand is youthful, loud and sporty while both Audi's and VW's stands are more sedate and sensible.

The group is also making moves to catch up with its competitors in the some of the fastest growing markets in the sector, namely those for minivans and 4x4s - or sports utility vehicles (SUVs).

In Paris, Volkswagen's Touareg 4x4 and its Touran minivan were launched amidst claims that its late arrival to these growth markets offers "tremendous opportunities".

Making money

But there is no point in making new models if they do not enable Volkswagen to make more money.

During summer, Dr Pischetsrieder made it clear that the group is making less money than it had hoped.

Volkswagen reduced its output almost 8% during the first six months of this year as weak demand in Europe, the US and Brazil hit total sales hard.

As a consequence, the group revised its profit prediction for the year as a whole to 3.9bn euros ($3.85bn; 2.47bn) from earlier predictions of 4.4bn euros.


Cars and strategies

Background
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06 Mar 02 | Business
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