Audi of America President Johan de Nysschen's remarks at the National Press Club

Remarks For Johan de Nysschen
National Press Club
December 14, 2009

Thank you, Frank (Maisano) and the members of the Newsmakers Committee for welcoming me here to the National Press Club.

It’s good to be here in Washington. And I don’t just mean that for today. As some of you may know, Audi relocated its corporate headquarters to Herndon, Virginia in 2008. We’re working to be a good neighbor. We, along with our corporate parent, invested $100 million to set up operations here and brought 400 direct jobs to the DC area.

As our team is settling down here, we’ve become involved in linking many of our marketing efforts to Washington events and organizations. For example, we served as a major sponsor of last year’s Presidential Inauguration, where our support facilitated minimal commercial breaks during the inaugural coverage by the major networks.

We also served as the exclusive automotive sponsor for the Washington Ideas Forum, we have built the Audi Club at one of the end zones at FedEx Field, and we’re proud to support the National Symphony Orchestra here in Washington.

While this is our second year in this region and our 40th year in America, it is our centennial as an automaker.

We are not the first car company to reach this milestone, but I believe we are the first to reach it with such momentum:

We are seeing record sales in the US and worldwide. We exceeded the one million sales mark last year, this year we are #1 in the luxury market in Europe, and I predict we will be #2 globally in 2010.

So it follows that we will attain a record 8% of the luxury market in this country. But it’s important to add that we are not pushing for volume growth. We are building a quality business, a quality product, and a quality brand. It’s not about parking an Audi in as many driveways as possible. It’s about parking an Audi in the right driveways.

Paying customers to buy your product is not sustainable, as we have seen. And for us, it is about sustainable, practicable growth. But our quest for sustainability goes beyond mere short term economics. Sustainability also means securing a future for the society in which we operate.

[And as world leaders meet in Copenhagen, one thing is certain – it will be a lower-carbon future.]

So my belief is this: The future will belong to the automobile company that can best answer two questions:

First, what will the future of automotive luxury look like?

(PAUSE)

Second, and more fundamentally, is driving itself a luxury humanity can sustainably afford?

These are significant questions, and the second one is not one that you often hear auto executives ask.

But we have to think of these things, because it goes to the essence of the sustainability of our business. Especially for a car company like ours, which is thinking in terms of centuries, we must take it upon ourselves to find the answers.

And we do. I’m told that the Secretary of Energy often tells stories in which the moral is: “If you want to delay a problem, hire a lobbyist. If you want to solve it, hire an engineer.”

There’s a reason Audi’s motto is “Truth in Engineering.” We are an engineering driven company, so we put a lot of faith in our engineers.

At the same time, we are also looking to governments around the world to provide a framework that supports progress, but doesn’t bias the marketplace of ideas… or the marketplace overall. I’ll have more to say about that in a moment.

So as we at Audi enter our second century, we are answering those questions of luxury and sustainability simultaneously – defining the future of luxury by redefining the future itself, to be more sustainable, more beautiful, and more progressive than ever before.

Let me first begin with the question of luxury.

Luxury as it was once known – “legacy luxury” – was unconcerned with cost in every sense of the word. It was about conspicuous consumption – size for the sake of size and symbols for the sake of status.

That definition of luxury is fast receding into the rearview mirror. “Progressive Luxury” is what we see when we look forward through the windshield.

There will always be people of enduring achievement who will be well rewarded for their work. So long as their work is honest, society needs them.

And these successful people will seek to reward themselves with cars from companies of enduring achievement.

But more than ever, those purchases also need to square with the ethos of an era that has been rightfully called “the end of excess.”

Luxury that embodies quality is really the only future for luxury.

And that is why we didn’t hide or hesitate last week, when we had the global premiere of our new flagship Audi A8, right here in the United States, in Miami.

This innovation is simultaneously 40% lighter, safer, and more rigid than steel, saving fuel throughout its life and yet improving vehicle dynamics and crash performance.

What we hope they do experience is how solid and authentic the vehicle is, a product of craftsmen and proud engineers.

We also make sure that everything works as consumers want it to work.
In the interest of time, I’m not going into detail about all of the technological advances of this new vehicle. But I do want to highlight some examples to illustrate our interpretation of progressive luxury.

No driver wants to spend their first hours in a car figuring out how to operate the radio or how to adjust the air conditioning or even put it into drive. And in this vehicle, they won’t. The multimedia interface is so intuitive that you can spell out what you want simply by tracing your finger on a touchpad.

A recent reviewer of an Audi described the brand as the “Apple of luxury cars” – “with sleek designs that are modern and minimalist, consistent and familiar.” I think that is a very good comparison – and it’s no coincidence that Steve Jobs drives an Audi.

We also devote a lot of time and attention to the things you may not have noticed.

For example, we actually have something called the “nose team.” We believe that an Audi has a particular signature in terms of the aroma of the cabin. And we must make sure that no material comes into that interior that will disturb that equilibrium. What other car company does this?

We bring a similar dedication to every knob and control. Try it the next time you’re in an Audi. Every single control and button in the car – whether it’s the radio button, the vent button, the sunroof operating button, the window button – they all feel exactly the same, the resistance is the same, the sound is the same, the way to operate it is identical… the term for all of this is “haptics” and this attention to detail inherent in understated luxury.

That’s what makes an Audi special. It’s a combination of all these things that makes the car feel flawless inside and out. Attention to detail. We believe that is what the future of luxury will look like. But luxury alone is only half of it.

We do spend a lot of time ensuring that our owners drive something better. The other half of it is that we and our consumers also want to drive at something better – a more sustainable future.

(PAUSE)

Part of the notion of Progressive Luxury is that true luxury leaders should also drive progress.

Now, beyond elegant design, powerful engines – two of which were recognized as among Ward’s 10 best engines this year – flawless finishes, and sweet-smelling interiors, Audi innovation is about a healthier environment, a reduced dependence on petroleum products, and a cleaner and greener tomorrow. Not just for the people who are driving our cars, but, honestly, for the greater benefit of society… the majority of people who probably will never drive an Audi.

The truly sustainable solution is to give today’s consumer a much more efficient version of what they already want – whether that’s performance … space … fine finishes… or all of the above. Consumers are not willing to compromise. They’ve told us what they want and we must rise to the challenge.

Frank helpfully recalled a little controversy I started involving my comments about the Chevy Volt.

I don’t remember using that exact characterization, but Al Gore never actually said that he invented the Internet – so I realize that argument doesn’t get me very far.

My point was simply one of economic feasibility. The 50% or so price increase that the Volt represents over a similar gasoline car cannot be offset through the savings from reduced fuel consumption. The only way to offset the extreme premium is through taxpayer-funded subsidies.

So I questioned if that makes economic sense at the prevailing price of energy, since nobody seems interested in raising fuel taxes and lowering personal income taxes to offset it.

Now, I want to be clear … I was not dismissing the idea of electric or hybrid vehicles. Every new technology needs early innovators and early adopters. We are striving to be an early innovator. In fact, shortly after that little “electrical storm,” Audi introduced the e-tron – our electric concept car. So we certainly believe this will be part of America’s – and the world’s – automotive future.

I truly do not believe there is an auto executive in the world who imagines we can maintain the status quo indefinitely.

We all want to produce vehicles which require less energy, have lower emissions, and provide sustainable individual mobility.

But there is more than one avenue which could lead us to the “promised land” of sustainable carbon neutral mobility. Popular opinion amongst many politicians and policymakers is that hybrids and the major leap forward today, plug-in hybrids will be the next step forward next year, and full EV’s the solution the year after that. Problem solved.

This was brought home to me rather forcefully at a dinner event here in DC last week, when a senior representative of an organization which positions itself as an environmental think tank, proclaimed that electrical vehicles are the only solution and that the industry should be forced to make only such vehicles as soon as possible.

Well, let’s consider that scenario.

There is no doubt that there will be a time when this technology will be feasible for mass produced luxury cars. But let’s consider what needs to happen for this to be realized.