Is Audi Stalling Out After A Decade Of Dominance?

Audi just about owned the luxury car game through much of the 2000s. They produced one of the consistently best-looking lineups of any automaker and packed their cars with incredible technology, performance and luxury features. Everyone wanted to be Audi, but is Audi starting to slip?

That's what this Reuters analysis piece alleges. They say that while Audi dominated much of the last decade and helped contribute as much as 40 percent of the Volkswagen Group's profits, they are starting to lag behind rivals BMW and Mercedes-Benz in certain ways. In particular, R&D spending.

Research and development spending by the 81-year-old brand, which is the profit engine of parent Volkswagen (VW), last year amounted to less than three-quarters of arch-rival BMW's outlay and a smaller fraction of Mercedes owner Daimler's.

While BMW trumpets its new "i" series of electric cars and Mercedes wins rave reviews for its new CLA and GLA ranges of sporty compact models, Audi risks looking like a laggard in an industry where innovation is a major draw for customers.

[...] Audi is on its third R&D chief in 16 months and a VW source told Reuters the parent was concerned the brand is resting on its laurels just as rivals push new technologies and designs.

It's kind of funny to see this happen. In recent years we've seen both Mercedes and BMW pull some tactics out of the Audi playbook. BMW's Mini-based front-wheel drive entry-level cars and Mercedes' CLA, A-Class and GLA all feel aimed squarely at the small luxury car market Audi has owned for some time with their A3 and A1 in places other than the U.S.

And then there's the aforementioned BMW i3 and i8. Audi has flirted with electric cars over the years but has never really delivered in that department. Reuters' piece doesn't address this, but I'm also concerned about Audi's design direction: the new A3 and S3 pretty much leave me cold. Both feel like re-hashes of old A4s rather than something new and exciting.

Is Audi really starting to rest on its laurels? That's what this analyst who spoke to Reuters is saying:

"Audi lacks a vision of the future as well as core competence on technology," said Arndt Ellinghorst, London-based head of automotive research at ISI.

"They have little to offer nowadays in terms of a clear corporate message and mainly live off their past success."

I certainly hope Audi will find their focus again soon. Their cars are certainly amazing, but it is starting to feel like they aren't quite as cutting-edge as they used to be. Technology and innovation are key to winning the luxury game; hopefully they can make "Vorsprung durch Technik" mean something again.