Audi plots new era in Australia with sharper pricing, hybrids and shorter model cycles

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Audi Australia has commenced implementation of a bold plan to break out of years-long product stagnation and slipping sales results, with brand director Jeff Mannering telling Chasing Cars the next 12-24 months will usher in a “renaissance” for the local success of the German brand.

Central to the hopes of a sales rebuild are three factors Audi Australia hopes will bring additional customer interest:

• Sharper pricing than key rivals Mercedes-Benz and BMW
• Shorter life cycles resulting in more frequent model updates
• More hybrids, in a comprehensive response to both emissions regulations and growing customer demand

Initiation of the campaign coincides with this week’s Australian launch of the third-generation Q5 midsize SUV (read our review) just months after the crossover hit German roads, and at prices undercutting the BMW X3 and Mercedes-Benz GLC.

“We’re now into our new phase – a renaissance, something that is maybe a little overdue,” said Mannering. Part of the issue we had was that our lifecycles were extended, so this will help get some new and some old customers in.”

Mannering and senior Audi Australia product executives are aware of the need to shift sales toward lower-CO2 powertrains to avoid penalties under the New Vehicle Efficiency Standard (NVES) regime that sees headline CO2 limits ratchet down from 141g/km in 2025 to 58g/km in 2029.

“It is a mathematical equation—as [NVES headline CO₂ limits progress] from 141g/km in 2025 to 117g/km in 2026 and onward, we reduce ICE and increase BEV and PHEV,” said brand director Jeff Mannering.

Led by the new Q5, a range of stronger mild hybrid powertrains are on the way to Australia to reduce the CO2 contribution of non-plug petrol and diesel powertrains to not only comply with NVES, but also to keep hot combustion Audi Sport models on sale for longer.

Read more detail about Audi Australia’s new hybrid strategy here.

Audi Australia has long occupied a pricing ‘sweet spot’ between its key German competition at the higher end and alternative premium marques like Volvo, Lexus and more recently Genesis at the lower end.

The marque acknowledges that it also has the threat of new Chinese luxury brands like Zeekr and IM Motor on its radar—and while it won’t adjust its offer too far downward to compete with the China set, it will maintain attractive entry prices.

“We have an internal strategy [regarding] our position in the Australian marketplace that offers significant customer value, and sometimes that does come down to a price point that is less than our German counterparts,” head of product Matt Dale told Chasing Cars.

“It is also the value we have imbued in the cars. We listen to customer feedback [and have added] over $10,000 [of features] in the entry Q5,” said Dale of the new Q5 TFSI 150kW front-wheel drive entry grade that costs $7600 more than the previous 35 TDI base model.

In response to common customer orders and feedback, items like S Line exterior design, matrix LED headlights, a higher-quality stereo, 360-degree parking camera, and a sliding/reclining rear seat have been made standard for the new-generation’s $81,000 + ORCs entry point.

The Q5 handily undercuts list pricing of the BMW X3 (from $86,800 + ORCs) and Mercedes-Benz GLC (from $89,000 + ORCs), though alternatives from other legacy brands like the Volvo XC60 (from $74,990 + ORCs) and Lexus NX (from $71,700 + ORCs) can still be had for less.

More Q5 powertrains are on the way, including a turbo petrol/all-wheel drive model and a PHEV. As with the new A5 sedan/wagon lineup, the circa-200kW petrol and 270kW PHEV may be priced equivalently as part of a deliberate strategy to coax more Aussies into low-CO2 PHEVs.

“Like BEVs, PHEVs have improved,” said product manager Peter Strudwicke. “Their batteries are getting bigger…and the price jump [from petrol] doesn’t have to be as big as it was, as proven with the A5.”

At the top end of the Q5 range, Audi Australia has followed the precedent set with the release of the recent A5/S5 sedan/wagon range by offering a considerably cheaper SQ5 high-performance SUV variant alongside a ‘full-fat’ version priced at $122,400 + ORCs.

Despite still packing a 270kW/550Nm mild-hybrid 3.0-litre petrol V6 engine, the SQ5 Edition One ($106,400 + ORCs) dramatically undercuts the BMW X3 M50 and Mercedes-AMG GLC43. 

Dale says this is another manifestation of Audi Australia’s internal “S model strategy”.

“Customers can get the S model performance at a very, very sharp price point. If you look at our two other significant competitors…there is no other product that offers this amount of performance, efficiency and equipment at that price,” Dale said.

While the established luxury brands occupy most of Audi’s competitor planning time, brand director Jeff Mannering says upcoming Chinese brands now factor into the analysis.

“We still look at our two or three main competitors, but it is always in the back of our mind and we know the luxury level of those [Chinese] brands are coming. We have to make sure our package and technology in the cars is right. It is also about the customer experience,” said Mannering.