The COVID Automobile Market
It is no longer much of a surprise that the luxury car market saw impressive profits even though the world was under attack from a pandemic. Just like we remember from 2008 onwards (the Great Recession), the rich just got richer. Many people focus on how poverty and inequality are becoming worse than ever, and it is still somehow shameful when someone talks about which luxury car is better or worse. It is still not quite socially acceptable to spend 200,000 EUR on a new car amid all this suffering, but not everybody shares this opinion. The premium customers want more goods with higher quality, and the competition is now more intense than ever.
In this war, the German car market plays a critical role. Germany’s main automakers are the bellwethers of the luxury car market. As they go, so goes the industry. One of the most prestigious German automakers is Audi. Like with every automaker, the pandemic brought about significant changes, but especially so at Audi. Especially because right before the pandemic began its attack on humanity in Europe, on 1 April 2020, Audi appointed a new CEO.
The Audi Brand
According to Audi CEO Markus Duesmann, “There were years where the whole industry was in awe of the performance and the spirit within Audi”, he told interviewers. “Audi was always aggressive and trying new things. Look at the R8, the TT, A5, A7 – these were all cars that defined a new segment”. Audi was known across the industry for pushing the technological envelope; for example, it pioneered lightweight technology with aluminium space frames. Over the years, however, Audi lost a bit of its edge. The company became the top-selling German luxury automaker in 2012-13, but sales fell dramatically over the next half-decade. By 2018, its ranking fell to number three, with Mercedes-Benz and BMW pulling ahead. When he became CEO, he “was excited about getting that momentum back or producing new momentum, and by developing the company further”.
The COVID-19 pandemic hit much of Western Europe in March 2020. Therefore, his CEO career began at one of the worst times possible. “It was not just a tough year; it was a very tough year”, he told interviewers. “We had to handle the crisis; we had to develop Audi, we had to set up a new portfolio of cars and work on a thousand fronts”. Despite the doom and gloom, he saw the opportunity to revamp and improve his company. “It is the most interesting time ever for the automotive industry because the automotive business is in transformation mode. If you think ahead, if you want to change things, if you want to develop a company, that’s a fantastic thing. So, driving this change and making Audi more flexible to react to this change is really what drives me.
Instead of just looking outward, Audi also looked inward to focus on personal growth, leading to company growth. “Before the crisis, I thought speaking to people face to face or to a crowd was my biggest strength, so at first, I felt really bad because it seems that my strongest weapon was taken away. But we developed formats and used digital tools so that people could see who I am, what I am, and how I think, without meeting me. And that worked really well”. Despite the myriad issues presented by COVID — from internal communication to worker shortages, to supply chain issues, to a global semi-conductor crisis — the CEO led Audi to the best first half-year in Audi’s history: 2021 saw a record number of deliveries to customers (981,681) and a strong net cash flow of 5.5 billion EUR.
Before the pandemic, Audi already had plans to modernise Audi’s portfolio, primarily moving towards electric vehicles. When he oversaw Vorsprung 2030, Audi’s ten-year strategy, he chose to “make it very precise, car by car, segment by segment, exactly how we wanted to do it, what platform we would use, what performance we expected, how we wanted to develop our customer base and how we wanted to bind customers to our brand. That’s all part of our new strategy and defines our way through the transformation.” He believes that this approach will distinguish Audi from its competition: “The whole European industry was not at the forefront of digitalisation. We were far forward, and we thought that was OK, but it’s not. Technology moves so fast, so we have to be at the forefront. Otherwise, we will lose”.