Audi bullish on itself, raises sales goal for 2015 after record 2006

Things are going pretty well over at Audi. In fact, 2006 was such a successful year Audi has adjusted its 2015 production forecast from 1.4 million to 1.5 million. 2015 you say? We're with you on that one. Lofty goals or not, Audi did have a bang-up year in 2006, highlighted by $1.7 billion in profits, 905,000 unit sales, and successful newer models like the A3 and Q7. '07 has begun on a positive note as well, with January global sales hitting 75,000 units. Audi isn't planning to hit the one million mark until 2008. If you do the math, the automaker is looking to average an additional 70,000+ sales year over year to hit the 1.5 million mark by 2015.

Audi's on a roll, seeing 11 consecutive years of sales gains as they enter more markets with products like the Q7, A3, R8, and the forthcoming A5. While additional sales gains for the brand appear to be a reasonable expectation, reaching the 2015 finish line in first place seems like a bit of a stretch. BMW is looking to increase sales to 1.6 million by 2010 and Mercedes has been increasing its product range in recent years as well. If the Audi keeps throwing out good-looking new models at a fast rate, we think the race will be a fun one to watch no matter who wins. Check out the Audi press release after the jump.

[Source: Automotive News]

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INGOLSTADT, Germany - Audi achieved new record figures for production, vehicle sales, revenue and profit before tax in the 2006 financial year. "Our excellent accounts for 2006 once again demonstrate how to achieve profitable growth. We are the fastest-growing premium brand in the world. This puts us well on our way to becoming the most successful premium car manufacturer in the world by 2015," remarked Rupert Stadler, Chairman of the Board of Management of AUDI AG, at today's Annual Press Conference in Ingolstadt.

Over proportional growth in revenue and earnings

The revenue of the Audi Group rose by 17.1 percent in the 2006 financial year to the all-time record level of EUR 31.1 billion. This rate of increase is significantly higher than the growth rate for vehicle sales (up 9.2 percent). The brand with the four rings enjoyed an even steeper rise of 43.2 percent in the operating result, to EUR 2,015 million.

This huge success is attributable in particular to the steady improvement in the model mix that has been brought about by selling higher-value vehicles. Meanwhile the measures to cut costs, boost productivity and optimize processes exercised a positive impact on earnings.

Profit before tax reached EUR 1,946 million and therefore showed a rise of 48.5 percent. This is its highest ever level in the history of the company. "The disproportionately high increase in revenue and earnings when compared with vehicle sales provides us with an excellent basis, and is the best possible evidence of our long-term drive for qualitative growth," emphasized Stadler. Profit after tax was EUR 1,343 million, representing a rise of 63 percent.

The Audi Group achieved significant growth of 4.5 percentage points in the return on investment, to 14.2 (9.7) percent. This places Audi among the leaders in the car industry. The disproportionately sharp rise in earnings compared with revenue is also reflected by the increase in the rate of return from 4.9 to 6.2 percent.

Record vehicle sales for eleventh year in succession

The Audi brand established a new record for vehicle sales for the eleventh year in succession in 2006: it delivered 905,188 vehicles to customers worldwide, representing a rise of 9.2 percent or 76,079 vehicles (2005: 829,109*). Record numbers of vehicles were sold in 41 markets.

The company achieved its best sales figure ever in Germany: 257,792 (247,125) vehicles were handed over to their new owners in 2006, equivalent to a rise of 4.3 percent. Audi has consequently achieved a market share of 7.6 percent in its home market of Germany, its highest in 26 years.

"Audi is a successful company that operates increasingly on a global scale. The ten biggest markets account for around 80 percent of our unit sales," explained Ralph Weyler, Member of the Board of Management of AUDI AG for Marketing and Sales, today in Ingolstadt. The biggest export market remains the USA with a record total of 90,116 units (83,066, up 8.5 percent), followed by UK on 86,003 (81,374, up 5.7 percent) and China (excluding Hong Kong) on 80,808 (58,128, up 39.0 percent). In China including Hong Kong, Audi increased its sales by 38.8 percent to 81,708 vehicles. "China is well on the way to becoming a second home market for Audi. That is where we believe our biggest potential for growth lies, so we are striving to build on our long-standing market lead for premium vehicles."

In Europe excluding Germany, the company enjoyed growth of 7.7 percent to 400,671 (371,995) units. The biggest rises in unit sales in absolute terms were achieved in Spain, France, Belgium, Italy and the UK.

The positive trend in Eastern Europe is continuing: the number of vehicles sold there rose by 31.7 percent to 27,083 (20,559) units. The most notable of these is Russia, where Audi is market leader in the premium segment with growth of 64.3 percent.

The subsidiary Lamborghini improved on the previous sales record from 2005 (1,600 units), selling 2,087 vehicles (up 30.4 percent).

Vehicle and engine production reaches record level

Car production (including Lamborghini) climbed by 14.1 percent in 2006 to the record level of 926,180 vehicles. With quattro versions accounting for 33.1 percent of this total, the Ingolstadt-based car manufacturer is now the market leader for four-wheel-drive vehicles in the premium segment. Engine production by the Audi Group climbed 11.8 percent to 1,895,695 units.

Quantitative and qualitative growth safeguarding jobs

Audi's recent choices of production locations have reaffirmed its faith in Germany as an industrial base. "Whenever we need to identify a production location for a new model, all the venues being considered naturally have to prove that they can build it on internationally competitive terms," explained Stadler.

The number of employees at December 31, 2006 was 52,463, and thus remained at the previous year's high level (52,430). 44,719 (44,970) people were employed at AUDI AG, including 31,304 (31,337) in Ingolstadt and 13,415 (13,633) in Neckarsulm. AUDI HUNGARIA MOTOR Kft. employed a workforce of 5,373 (5,022) employees, the Lamborghini Group had 672 (681) and Volkswagen Group Italia S.p.A. (formerly AUTOGERMA S.p.A.) 875 (845) employees. With 2,231 (2,236) apprentices in 20 different trades, Audi has maintained the number of those in training at the Ingolstadt and Neckarsulm plants at the previous year's high level.

The additional share of profits that the company paid out to employees for the first time last year will be even higher this time round, thanks to the record earnings: a total amount of EUR 81.5 million will be paid out to the workforce. On average this means EUR 1,959 per employee, virtually four times the payment of the previous year. It will be paid on top of the existing profit-sharing arrangements for employees.

Outlook for 2007: safeguarding sustainability

"Our strategy focuses on growth – in unit sales, revenue and earnings. You can see from our record figures that our corporate strategy is working. However, we will not be resting on our laurels. Our task for this and subsequent years is now to safeguard the sustainability of the sales, revenue and earnings figures that we have achieved, and to secure their steady growth," added Stadler. "Audi has got off to an excellent start to 2007. With unit sales of around 75,150, we can already look back on the best January in the company's history." This figure meant that Audi's vehicle sales worldwide were 8.0 percent up on the same month of the previous year.

In view of the above-average qualitative and quantitative growth it has enjoyed in recent years, the company expects the key figures for 2007 to be on a par with the previous year. "According to the principle of "Progressive Performance", which we also took as the title for this year's Annual Report, we will be adopting a variety of measures to secure further significant cuts in fuel consumption, and push ahead with the development of alternative fuels and drive principles," declared Stadler. The group will exploit growth potential in existing and new markets, further optimize corporate processes and systematically push forward with its product initiative: the new Audi A5 car line will be launched in the first half of the year with the appearance of the Audi A5 Coupé. Audi has furthermore just decided to build a compact, sporty small car. "Because we have ambitious objectives even if we will be taking the opportunity to catch our breath this year. We aim to push our unit sales beyond the one million barrier by the end of 2008. And we have set ourselves the sales target of 1.5 million vehicles by 2015," concluded Stadler at this year's Annual Press Conference.

* ) Prior-year figures and rates of increase in each case in brackets

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