2021 SWOT Analysis on Audi

ABOUT THE COMPANY

AUDI Group is a German automobile manufacturer, is wholly a subsidiary of the Volkswagen group headquartered in Ingolstadt, Bravia, Germany. The origin of Audi was in the early 20th century, the initial enterprise was found by August Horch and two other manufacturers DKW and Wanderer which led to the foundation of Auto Union in 1932. The modern era of Audi begun in the 1960s when Volkswagen acquired Auto-union from Daimler-Benz. The present-day company was formed in 1969 after Volkswagen merged Auto-Union with NSU Motorenwerke.

The Audi Group is a decentralized organization, with individual subsidiaries conducting their business activities independently. Group management and governance are ensured through guidelines, channels of reporting, and committees. The company’s business activities mainly comprise of the development, production, and sale of cars, along with the task of managing the Audi Group. Audi-branded vehicles are produced in nine production facilities all over the world. The Audi logo with four rings each represent one of four car companies that merged to create Audi’s predecessor company, Auto Union. Audi’s slogan is Vorsprung Durch Technik, which means “Being Ahead through Technology”. Audi is one of the best-selling luxury automobile brands in the world.  In 2019 Audi’s total revenue was US$72.1 billion worldwide, while total market revenue amounted to US$2.2 trillion. The largest passenger cars segment, Small SUVs, accounted for 32% of Audi’s revenue in 2019. Audi’s second-largest segment was the Large Cars segment. That accounted for 23% of the makes revenue in 2019. In the market share by revenue category, Toyota (9.5%), Volkswagen (7.4%) and Ford (5.9%) take the lead worldwide. Audi had a 3.69% market share (Statista, 2020). Audi (Volkswagen) is ranked in 7th position on Fortune 500, and  44th position by Forbes as the World’s most valuable brands 2020 (Forbes,2021).

MISSION: “CONSISTENTLY AUDI

“To act purposefully, systematically, and with full effort – in other words, Consistently.”

VISION: “UNLEASH THE BEAUTY OF SUSTAINABLE MOBILITY”

The Volkswagen Group has committed itself to the goals of the Paris Climate Agreement and wants to achieve net-zero carbon emissions by 2050.

STRATEGY

The company’s strategy is to make a major contribution to the transformation into a new age of mobility, addressing current and future challenges confidently and with an eye to the opportunities they bring, and at the same time are supporting the implementation of the Volkswagen Group strategy “TOGETHER 2025+.”

SWOT ANALYSIS

SWOT, a composition of Strengths, Weaknesses, Opportunities, and Threats. In which the Strengths and Weaknesses are about the internal resources and capabilities of the company and Opportunities and Threats are developments in the external environment of the company. SWOT is one of the best situation analysis tools to start with as the internal and external environment of an organization interacts continuously changing the competitive advantage for an organization for good or bad. However, the business environment never remains the same, so the relevance of SWOT analysis is only for a limited period. Through this analysis, the company can identify its strengths as to whether it is capable of making use of the opportunities found in the external environment. The companies like Audi (Volkswagen) can utilize those developments in the external environment for development and innovation.

Therefore, the SWOT analysis provides a glance as to how the company can add to its strengths by better making use of the opportunities in the external environment and respond effectively to the threats in that environment. Through this, the company can reduce its weaknesses such as a decline in revenue and profitability.

SWOT ANALYSIS ON AUDI GROUP

STRENGTHS(S)

  • Innovation, Sustainability, and Product Development: 70 % of all of the investment of Audi in the next five years will flow into new models and innovative technologies,” (White, 2015).
  • Strong Global Product Portfolio: After e-Tron GT and e-Tron Sportback, Audi is ready to add another electric car to its global portfolio.  Audi e-TronGT is the third all-electric car that was debuted in February 2021, it will go from 0 to 100km/h in 3.5 seconds (Times Drive, 2021).
  • Audi production gradually starts up again in Europe: Audi production gradually starts up again in Europe in 2020 (Audi, 2020).
  •  Audi e-Tron Charging Service: more convenient charging for Audi customers: Audi is making charging even more convenient and increasing price transparency. In February 2020, it already provided access to public charging infrastructure for electric vehicles in 24 European countries. Customers can currently use more than 135,000 charging points1 from over 400 different international providers with just one card (Audi, 2020).
  • Ranked 7th in Fortune 500 list (Fortune, 2020).
  • Audi’s initiative for Digital Factory:  Pooling competence for Smart Production and Logistics, in 2021 Audi will be collaborating closely in the future with the Technical University of Munich and the Fraunhofer Institute for Industrial Engineering IAO in the area of digitalization at the Bildungscampus of Dieter Schwarz Foundation in Heilbronn (Capgemini, 2021). 

WEAKNESSES(W)

  • Penalty for diesel emission manipulation: In 2015 US investigators discovered that some VW diesel cars were fitted with what became known as “defeat devices” to flatter emissions readings during engine tests so that the true output of nitrogen oxide was reduced. Audi was fined €800m consisting of €5m for regulatory rule-breaking, with the rest being paid for the economic benefits resulting from the sale of cars with defeat devices (BBC, 2018).
  • Decrease in Net-worth: As of September 30, 2020, the balance sheet total of the Audi Group decreased to EUR 65,122 (66,878) million compared with the position as of December 31, 2019 (Audi, 2020).
  • Decline in car sales: The car-sales of Audi brand declined in 2020 by 13% to 1,187,190 (1,357,102) vehicles as the car market fell by –20 % On a cumulative basis, China was 4 per cent above prior-year level thanks to strong market demand  Deliveries to customers were up 6 per cent year-on-year in the third quarter thanks to a recovery in core markets (Audi, 2020)
  • Recalling of cars in 2019:  Audi recalled 144,092 of its 2017 and 2018 A4 and A5 models because of a problem with the system that detects whether a passenger is in the front seat (Linkov, 2019).

OPPORTUNITIES(O)

  • Partnership with Ford and Agro AI:  Audi (Volkswagen) Ford, and Argo AI are making their partnership for automated and electric driving vehicles. This deal provides the opportunity to spread the development costs of these technologies over a larger number of vehicles, to all three companies involved (Abuelsamid, 2019).
  • Future of Driverless Vehicles: The smart technology of Driverless electric cars will not only help to decrease emissions because these cars are likely to be electric, but it will reduce idle time because traffic jams are likely to decrease too. It will also allow us to think differently about how we commute. This opportunity can be exploited by the company for its future growth (Emerald, 2020).
  • Increase in global EV sale: The global sales of EVs in 2020 increased by 39 per cent year on year to 3.1 million units. Audi seems to exploit this growth opportunity as its EV e-Tron could achieve 79.5% growth in the EU in 2020 when compared to 2019, e-Tron delivers 47,324 units in 2020 making it the best selling EV car in the EU ( Lambert, 2021).
  • Increased  EV sales in china:  New research shows that a record 1.3 million electric vehicles (EVs) were sold in China in 2020. Worldwide sales of EVs rocketed by 39% in 2020. This provides an opportunity for Audi’s e-Tron in the Chinese Market (Canalys, 2021)

THREATS(T)

  • Volkswagens sales decline in china:  Volkswagen group sales in China had a fall of single-digit per cent in 2020, compared to German carmaker BMW which achieved record sales in China in 2020. Of the total 2.3 million BMW and Mini vehicles sold last year, almost one in three were sold in China (Xinhuanet, 2021).
  • Global Economic situations: There is a huge decline in Production, Distribution, etc. global demand for passenger cars also declined due to the spread of the Covid-19 Pandemic (Audi, 2020).
  • Low Reliability and High cost: while comparing to BMW the cost of Audi is high and Reliability is very poor (Hanson, 2021).
  • High Competition in China: Audi Is Facing Stiff Competition In China From BMW And Mercedes-Benz (Trefis, 2016).

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