BloombergFRANKFURT (Bloomberg) — Audi is gearing up to boost profit outside its traditional business of producing and selling upscale cars in a push against Silicon Valley’s software giants that are keen to mine potentially lucrative vehicle data.
The world’s third-largest luxury-car brand expects to generate operating profit of €1 billion ($1.2 billion) in 2025, the Volkswagen AG unit said Tuesday. The strategy involves tapping into the time people spend in their vehicles and the data that generates to offer services like automated parking and in-car shopping. That would amount to nearly a fifth of last year’s profit.
“We’re accelerating the global rollout of new, profitable business models in those areas we believe will be material to our industry in future,” Audi Chief Financial Officer Alexander Seitz said in a statement. “This will allow Audi to protect its high margins despite significant investments.”
The push into digital services is key for Audi as it plans to invest a record €40 billion in electric cars, autonomous driving and connected services by 2025. The brand is seeking to burnish an image tarnished by the diesel scandal and recover lost ground from Mercedes-Benz and BMW AG.
To maintain profits and free up funds for battery-powered vehicles, Audi is looking to step up cost savings beyond a goal of €10 billion announced last year, Chief Executive Officer Rupert Stadler told reporters on a conference call.
“We want a tad more,” Stadler said, referring to the efficiency target. “In electric mobility, we want to become the number one among the premium manufacturers.”
Audi expects battery-powered and plug-in hybrid vehicles to make up one-third of deliveries in 2025, or around 800,000 vehicles, the company said, exceeding the target range of 15 percent to 25 percent of its two closest competitors. Audi will start production of its first all-electric model, the E-Tron, in about three months, adding the E-Tron Sportback variant next year. It will roll out more than 20 electric and hybrid cars by 2025, with pure-electric versions accounting for the largest chunk.Speech