Buoyant Audi looks for stability in fleet

Audi makes cars that fleet drivers want - it won two Fleet News awards this year for its A4 and A3 cars. But 2010 is shaping up to be a challenging year and Audi’s head of fleet sales Iain Carmichael says he will be happy if sales remain static.

At a time when many manufacturers are looking to grow fleet sales to help compensate for the expected drop in retail sales, Audi is taking a different view.

“My target this year is to deliver a similar level of volume as 2009,” says Carmichael. That equates to 6.8% of the fleet market or some 60,000 cars.

Despite his cautious approach, inline with the rest of the automotive industry, Audi fleet sales got off to a flying start to the year.

“It has been particularly strong in the corporate channel, which is the core of what we do,” says Carmichael. “Customers want to drive Audis and the majority want to fund Audis and the majority will do that through the FN50 contract hire and leasing industry.”

Audi’s strength is in its desirability among user chooser fleet drivers. “The driver for us is the critical person. We don’t sell in bulk – the majority of our cars go to user choosers who are speccing up their Audi and ordering it through their contract hire company.”

This strength in the user-chooser market makes Carmichael’s plan not to grow sales in rental and Motability believable.

Audi is one of those marques that competitors’ fleet sales directors at the volume manufacturers must envy.

It makes aspirational cars which puts it at an advantage over volume carmakers who may chase volume by pushing cars into the short-term rental and Motability rather than dictate sales into these sectors.

Audi puts just 3% of its total volume - or 3,000 cars a year - into rental fleets, almost all on buy back thus guaranteeing its dealers a supply of quality used cars – typically seven months old with between 12,000 and 14,000 miles on the clock.

“That 3% is the highest level I will go to,” says Carmichael.

Motability, which often requires significant manufacturer support, gets just a handful – between 200 and 500 – Audi cars a year. “Motability requires a factor of support,” says Carmichael. “And that’s not what we are about.”

There is one area of fleet sales that Audi could arguably be seen to be over represented in – that of internal registered cars.

It puts 10,000 cars – 10% of total sales volume – into internal and demonstration fleet. This is a level Carmichael is happy with. He says strong residual values, which have benefited the entire industry, make internal registrations viable.

“This year what is a key factor is the return of residual values, making the registration of cars internally, whether that’s by the manufacturer or dealers, much more possible,” he says.

“Our demo fleet is now back to where we want it to be, the same is true of our dealer demonstrators. These are all prime used cars for our dealer network.”