Audi Unleashes Its Ferrari Killer

Looking for a breakout car, Audi borrows technology from Lamborghini and debuts its $130,000 R8 at the Paris Motor Show

It's got extravagant horsepower, electrifying design, and a stance that screams, "get out of my way." And it's not a Ferrari or Lamborghini. Audi's $130,000 R8 sports car, unveiled on Sept. 27, the eve of the Paris Motor Show, is a brash young challenger to the exclusive club of European sports carmakers, from Porsche and BMW to Maserati and Aston Martin. "Every premium car company needs a brand shaper. It shows what an automaker can achieve," says BMW Chief Executive Norbert Reithofer.

For Audi, the R8 is a milestone in the company's 15-year bid to shed its mass-market past and secure its rightful place alongside BMW and Mercedes as Germany's third global luxury kingpin.

Billions of dollars invested in technology and cutting-edge design have already propelled Audi's cars successfully into the premium league, especially in Europe where finicky German customers rate many Audi models No. 1 in their class. But the R8 will globally reinforce Audi's sporty, premium-car image with glamour and raw power. "For the brand and the company, the R8 is a symbol of strength and a hint of the future. It's much more than a car," says Audi Sales & Marketing Chief Ralph Weyler.


  Three years ago, when Audi stole the limelight at the Frankfurt Auto Show with its Le Mans concept sports car on which the R8 is based, Audi lacked the global marketing muscle and reach to launch such an exclusive model. Since then, heavy investments in an upmarket sales network have helped pave the way for the launch of the R8. Audi has targeted 25 urban centers in the U.S., including Miami and Los Angeles, to host glittering, new, steel-and-glass dealer centers called Audi Forums. Audi's Park Avenue Forum in Manhattan opens on Oct. 14.

Like its competitors in the $120,000-plus class, the Audi R8 will sell in limited numbers—probably not exceeding 5,000 cars a year. There may even be a year's wait for the 480-horsepower car, which hits U.S. showrooms next year and is largely hand-built at Audi's plant in Neckarsulm, Germany.

But there's also an Italian accent in the elegant, sculpted lines of the R8. Audi's Italian Design Chief Walter de'Silva has been injecting greater emotion into Audi's classic Bauhaus forms over the past three years. The R8 sits broad and squat on the road, with a long, sloping glass roof that displays the midmounted engine. The car's curving shoulder line and its strong arch over both front and rear wheels are faintly reminiscent of Audi's iconic TT roadster, as is the rounded front and rear. De'Silva describes the car's look as "strong and powerful," but not arrogant.


  Several CEOs, including DaimlerChrysler (DCX) CEO Dieter Zetsche, beat a path to the Audi stand at 7:30 a.m. before the fairgrounds opened to journalists—for a firsthand look at one of the most exciting new models unveiled at this year's Paris show. "It's a good-looking car. I like the front," says Zetsche.

Audi's R8 is a direct challenge to Porsche's $100,000 Carerra 911, with more horsepower and a higher price tag than the Carrera, but less than the Turbo Carrera. It has a midmounted V8 engine, permanent four-wheel drive, and Audi's Space-Frame aluminum body from the flagship A8 luxury sedan. The car also shares some components with the Lamborghini Gallardo, such as the automatic mechanical gearbox. Lamborghini belongs to Volkswagen's Audi group, along with Spanish automaker Seat.

Industry analysts said Audi's R8 catches larger Bavarian rival BMW at a moment when BMW has no similar model to defend its turf. Now the global No. 1 premium automaker in terms of vehicle sales, BMW has been pondering a Z10 sports car but has nothing in the R8 segment since it built the limited edition Z8. "BMW has nothing to go up against the R8. That's bad for its sporty brand image," says Christoph Stuermer, senior researcher at Global Insight in Frankfurt.

Audi pioneered new lighting technology for the R8—LED (light-emitting diode) headlights —which are more durable than existing bulbs, add to safety in daylight driving, and give the car's face a new design element. The LED elements look like a string of pearls outlining the artistic three-dimensional headlights. "It's micro-design," says de'Silva. "When the daylight fades, we want people to see the personality of the car. It's in the headlamps and it's an Audi."


  Designed for sports car fans who also want to use the car on an everyday basis—the R8 boasts more interior space than its rivals and its trunk fits two sets of golf clubs. "The car offers a lot of comfort—that will surprise people," says Audi Technology Chief Ulrich Hackenberg.

Though it is no head-to-head competitor with Ferrari, the R8 may also lure buyers from other luxury brands selling high-performance sports cars with much higher price tags. "The R8 is for people who want to express their individuality," says Weyler. Like Ferrari, Audi has a racing tradition, and the R8 is named after its winning Le Mans race car. And the R8 accelerates from 0 to 62 mph in 4.6 seconds.

The R8 is part of a model offensive that will expand Audi's lineup dramatically over the next three years. In November Audi will unveil the roadster version of the second-generation TT sports car, which is just hitting European showrooms and starts at around $40,000. And in March, it will take the wraps off a small sports coupe called the A5. The company has forecast that new models will help drive Audi's global sales over 1 million by 2008 or 2009.


  In the U.S. where it is still much weaker than other luxury brands, Audi is forecasting 2006 sales of 85,000 to 90,000. "The problem we have in the U.S. is our brand is not as strong as BMW, Mercedes, and Lexus. In Europe we are on the same level. My objective is to bring Audi up to this level in the U.S.," says Weyler. Germany, the U.S., and Britain are expected to be the biggest markets for the R8, with the U.S. accounting for 30% to 50% of the R8's sales.

Orders have already started rolling in for the car, but the numbers are misleading since some professed buyers are just people eager to resell the car quickly in markets like Russia—a problem with all limited-edition super sports cars. The first customer? Audi CEO Martin Winterkorn, an engineer with a penchant for fast cars, takes delivery in two weeks.

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