Audi expects tough year amid model changes

[March 15, 2018]  INGOLSTADT, Germany (Reuters) - Audi expects a difficult year as the launch of over 20 redesigned and new models could hurt deliveries, after declining sales of high-end models and further costs from an emissions scandal kept profitability below that of Mercedes-Benz and BMW.

Volkswagen's <VOWG_p.DE> main profit engine will introduce a new model every three weeks this year, including the redesigned A6 saloon, the all-new Q8 sport-utility vehicle (SUV) and the battery-powered e-tron SUV, it said on Thursday.

Bottlenecks expected from introducing new vehicle tests done to harmonized world standards, and the "dieselgate" scandal which in 2017 cost another 387 million euros ($478 million), will add further strains, Audi said.

"This means an enormous feat of strength for us," Chief Executive Rupert Stadler said. "2018 will be a year of transition."

The model replacements caused Audi to refrain from projecting another outright increase in deliveries, saying it wants to at least match last year's record 1.88 million sales. Revenue is expected to slightly exceed last year's 60.1 billion euros.

The model offensive, also including the overhauled Q3 compact SUV, is expected to have a "sustained positive impact" on deliveries and earnings from 2019, Audi said.

The luxury brand achieved 1 billion euros of cost reductions last year as part of a goal to cut spending in R&D, sales and other departments by 10 billion euros by 2022 to free up funds for its electric-car program.

Also backed by a new joint platform with VW premium stable Porsche, Audi plans to launch 20 electrified models by 2025, more than half of which will be all-electric.

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(Reporting by Andreas Cremer; Editing by Maria Sheahan and Douglas Busvine)

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