Audi’s SUV Plans to Bottom Out With Subcompact Q1 Model

Volkswagen AG (VOW)’s Audi unit, the world’s second-largest maker of luxury cars, will expand its sport-utility vehicle lineup with the subcompact Q1 to shore up its bid to outsell Bayerische Motoren Werke AG. (BMW)

The Q1 will roll off assembly lines at the German brand’s factory near its headquarters in Ingolstadt as of 2016, the VW unit said today in a statement.

“The Audi Q1 is part of our broad-based SUV strategy,” Chief Executive Rupert Stadler said in the statement. The model will “round off our Q series at the bottom end.”

Audi plans to expand its product range to more than 60 models from 49 to boost annual sales to at least 2 million vehicles by 2020, 37 percent more than last year’s deliveries. The luxury brand currently sells the Q3, Q5 and Q7 SUVs as well as the RS Q3 and SQ5 performance versions.

Boosting its range of SUVs is a cornerstone of Audi’s plan to dethrone BMW as the world’s best-selling luxury car brand. Audi forecasts that SUVs will account for more than 35 percent of its total production at the end of the decade, compared with about 28 percent this year.

Audi is also looking to fend off Daimler AG (DAI)’s Mercedes-Benz, which is likewise vying for the sales lead in the segment. To keep ahead of the pack, BMW is rolling out the X4, its fifth SUV, next year. Mercedes is introducing the compact GLA model to add to the GLK, M-Class, GL and G-Class off-roader.

Audi is the largest earnings contributor of Volkswagen, Europe’s biggest automaker, and profits from the upscale unit are critical to fund the parent company’s bid to become the world’s biggest carmaker by 2018.

The Q1 will take up capacity made available after Audi shifts manufacturing of the Q5 to a new factory in San Jose Chiapa, Mexico. Audi also produces the A3 hatchback as well as A4 and A5 sedans and wagons in Ingolstadt, its biggest factory.

To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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