Audi Remakes Iconic TT in Move to Reinvigorate Design


AudiAudi AG (NSU)’s original TT won acclaim in 1998 for a sexy design that marked a departure from its styling at the time. Fifteen years later, Audi is counting on a remake of the iconic coupe to generate similar buzz.

The first TT boosted Audi’s popularity and put Bayerische Motoren Werke AG and Mercedes-Benz on notice that theVolkswagen AG (VOW) brand was a full-fledged rival. The bright red TT revamp that rolled across the stage tonight in Geneva at a gala event for 1,000 journalists is meant to once again set Audi apart.

After almost tripling sales in the last decade with makes such as the A3 compact, R8 sports car and Q7 sport-utility vehicle, the rapid growth at VW’s biggest earningscontributor is slowing. Industry experts now point to Daimler AG (DAI)’s Mercedes as the luxury-car maker showing the greatest design innovation and argue that Audi models currently so closely mirror one another that it’s hard to tell them apart.

“The criticism Audi receives is justified,” said Lutz Fuegener, a transportation design professor at Germany’s Pforzheim University. “When an Audi appears in the rear-view mirror these days, figuring out which model line it is has become quite difficult. It’s time for Audi to come up with something more courageous again.”

Audi models in recent years have been dominated by a large front grille, dubbed the singleframe, with design differences between vehicles becoming less pronounced as the world’s second-largest maker of premium cars opted for a conservative approach meant to avoid alienating established buyers.

Management Changes

That may be about to change. VW Chairman Ferdinand Piech and Chief Executive Officer Martin Winterkorn, both of whom previously ran Audi, are shaking up the Ingolstadt, Germany-based automaker with an overhaul of top management, including naming new design and development chiefs.

Piech and Winterkorn, who were driving forces behind Audi’s past innovations, including the Quattro four-wheel-drive system and lightweight construction using aluminum, in the last two years have replaced five of Audi’s seven board members. CEO Rupert Stadler and Chief Financial Officer Axel Strotbek are the only two who have kept their posts.

Stadler argues Audi is just getting started and he’s embarking on the biggest spending spree in the automaker’s history to prove critics wrong. Audi will invest 22 billion euros ($30.4 billion) in the next five years, with 70 percent going toward new products and technology, and most of the rest to expand manufacturing.

“Audi is for sure the most progressive brand in the premium segment,” Stadler said in an e-mailed response to questions. “You have to differentiate between what is promoted well and what is being offered for years without much fanfare.”

New Designer

Winterkorn has changed Audi’s research and development chief twice since 2012, and this year replaced Wolfgang Egger, head of Audi design since 2007, with Marc Lichte, who was responsible for the exterior look of VW brand cars.

Wolfgang Duerheimer, who ran VW’s Bentley marque, lasted less than a year running Audi R&D before Winterkorn parachuted in his close confidant Ulrich Hackenberg.

Hackenberg immediately revived a project to build an electric version of the R8 that Duerheimer had canned. He’s since then pitched to Audi’s board small-scale production of the model. Stadler said in January a decision will likely come in the first quarter.

BMW meanwhile is miles ahead. The world’s top seller of premium cars rolled out the i3 electric city car in 2013, with demand already outstripping production, and will bring to market the i8 plug-in hybrid racer later this year.

BMW Electrics

The i3 is the first mass-produced model built out of carbon fiber, a material thinner than human hair yet tougher than steel. Audi, instead of building a pure electric, has opted to introduce a plug-in hybrid version of the A3 later this year.

“Audi’s products just aren’t as exciting anymore, and BMW has gained a technological edge with its electric cars,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler who recommends selling VW shares. “It’s a problem.”

While Audi has a goal of becoming the biggest maker of luxury cars by the end of the decade, analysts predict that this year No. 3 Mercedes will make sales gains on Audi and that BMW will defend its lead. Industry forecaster IHS Automotive estimates Mercedes will narrow the gap with Audi to 89,500 cars in 2014 — from 134,700 last year — and that the two will run neck-and-neck in 2015.

Mercedes Momentum

Mercedes has posted the biggest growth of the three German luxury-car makers in recent months on demand for models such as the revamped flagship S-Class and CLA coupe. This year, the Stuttgart-based automakerwill roll out a remake of its best-selling C-Class and bring to market the GLA compact SUV.

With revamped versions of high-volume models like the A4 and new SUVs not hitting showrooms until next year, Audi is left to promote image boosting niche models like the TT or the S1, a sporty variant of the A1 subcompact, which will be introduced in the second quarter.

The TT’s third version moves Audi’s four rings trademark to the hood’s center rather than the grille, reminiscent of the R8. Buyers can opt for new Matrix LED technology, where individual light-emitting diodes generate the main beam. The new TT sports a virtual dashboard with computer generated dials that are superimposed over the navigation maps.

The look has become increasingly important to consumers. Design for the first time replaced fuel economy as the most important selling point after reliability, according to a survey of German buyers by researcher Deutsche Automobil Treuhand.

Audi’s roots date back to 1899, when August Horch founded the company in Cologne. Audi is the Latin translation of his last name. As the automaker works on new models in the coming years, analysts say the premium automaker should remember its own catch-phrase, “progress through technology.”

“It’s really about time that Audi lives up to its ‘Vorsprung durch Technik’ slogan again,” said Frank Schwope, a Hanover-based NordLB analyst who recommends buying VW shares. “It has been falling further behind recently.”