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Audi Peddles Luxury Coupe on Course to Catch BMW in U.S.: Cars

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An Audi TT RS
Audi's TT RS model, the pinnacle of the TT model line, is powered by a 2.5-liter five-cylinder engine. Source: Audi AG via Bloomberg

Aug. 3 (Bloomberg) -- Audi AG will introduce its top-of-the line sports cars in the U.S. from next month to enhance the brand’s image and charge higher prices as it bids to narrow the gap to luxury-car leader Bayerische Motoren Werke AG.

Audi’s 340-horsepower TT RS will go on sale in the U.S. next month, while the 78,000-euro ($111,000) RS 5 coupe, which competes with BMW’s two-door M3, will hit showrooms next year, sales chief Peter Schwarzenbauer said in an interview. Audi has a goal of doubling U.S. sales of high-performance cars to about 16,000 by 2015.

The Volkswagen AG luxury brand, which lags behind BMW and Daimler AG’s Mercedes-Benz in pricing power, will offer the top-end RS variants as part of a decade-long effort to get more money for its cars. RS models, which have all-wheel drive and bigger engines, sell for a higher amount and help increase the appeal of the entire model range.

“This is part of a very effective strategy on Audi’s part to get the brand perceived to be something more,” said Jim Hall, principal of 2953 Analytics, a consulting firm in Birmingham, Michigan. “Selling the RS 5 and the TT RS will continue that change of perception.”

The percentage of U.S. consumers considering an Audi has grown to 5.5 percent last month from 3.9 percent in June of 2007, according to U.S. auto website Edmunds.com. Audi sold 9,146 cars in the U.S. last month, an increase of 17 percent on the previous year and a record for the month, though less than half BMW’s 21,409, the German carmakers said yesterday.

Price Increases

Audi, the biggest contributor to VW profit, raised average U.S. transaction prices over the past 18 months faster than its two German competitors, Edmunds.com data shows. The carmaker’s average selling price has increased 9.1 percent since January of last year to $48,127. BMW prices fell 3.6 percent to $52,552, while Mercedes’s rose 2.6 percent to $54,530.

“This is a great trend for Audi,” Edmunds.com analyst Jeremy Acevedo said. “Their vehicles are popular, demand is meeting supply and cars aren’t sitting on the lot for excessive periods of time.”

The VW division in the U.S. currently only sells S-line high-performance cars, which have less power than RS models. The offerings include an S4 sedan, S5 coupe and TTS roadster.

BMW has the highest per-car profit of the top three luxury-car makers. Its auto unit posted second-quarter earnings before interest and taxes equivalent to 14.4 percent of sales, up from 9.6 percent a year earlier, helped by its high-end offerings. That beat margins of 11.8 percent at Audi and 10.7 percent at Mercedes-Benz.

M Models

The U.S. is the biggest market for BMW M performance cars and the Munich-based manufacturer is selling all of its current models including the X5 M and X6 M sport-utility vehicles in the country, according to spokesman Stefan Behr.

BMW’s overhauled M5, to be unveiled at the Frankfurt auto show next month, will go on sale in the U.S. next year, he said. The model will burn over 30 percent less fuel than its predecessor while allowing for 10 percent more performance.

Audi’s current RS 5, which surges to 100 kilometers (62 miles) per hour in 4.6 seconds, burns 30 percent less fuel than its predecessor because of lighter weight, upgraded powertrains and regenerative braking. The car, powered by an eight-cylinder 450-horsepower engine, caters to a “growing number” of ecologically conscious sports-car buyers in the U.S., Schwarzenbauer said.

The TT RS, which features a high-gloss black diamond-patterned grill, a fixed rear-wing spoiler and oval exhaust pipes, limits fuel consumption to 9 liters per 100 kilometers (26 miles per gallon) because of an aluminum-based body that makes the car 80 kilograms (176 pounds) lighter than a steel frame. The interior has aluminum door sills with the RS logo and specially designed door handles.

American Plea

“The technical capabilities of the Audi brand are perfectly distilled in the RS models,” Johan de Nysschen, Audi’s U.S. chief, said in an e-mail. “For the past few years, American sports car enthusiasts have pleaded with us to make the marque available here.”

Sales of Audi’s 333-horsepower S4, which debuted in the U.S. in 2009 and uses a quarter less fuel than its predecessor, have more than tripled, accounting for 14 percent of A4 deliveries in the market. Audi is mulling a sportier version of the A6 sedan, its second-best selling model, for the U.S.

“We’re now taking the first steps with the TT RS and the RS 5,” Schwarzenbauer said by phone from Audi’s Ingolstadt, Germany-based headquarters. “I could indeed imagine that we’ll continue along that route in the future.”

Schwarzenbauer, who ran Porsche AG’s operations in North America before joining Audi in 2008, said Audi will use special advertising events in the U.S. to promote the TT RS and RS 5 models. The launch of the TT RS next month comes after 11,500 fans signed a Facebook petition drive calling on Audi to introduce the model in the U.S., he said.

“Our performance-car strategy isn’t geared to volumes,” Schwarzenbauer said. “The point of this model offensive is to sharpen the brand and to illustrate what Audi stands for in the U.S.”

To contact the reporter on this story: Andreas Cremer in Berlin at acremer@bloomberg.net

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

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