Audi’s new 4x4s to be built in eastern Europe

Audi will expand its line-up of higher margin 4x4s and assemble two new models at lower cost plants in eastern Europe, the German premium car maker said on Tuesday, as it strives to boost profitability.

The Volkswagen-owned brand last month reported a 37 per cent plunge in operating profit after it raised provisions to help meet the cost of the group’s diesel emissions test-cheating scandal.

Audi said on Tuesday it would start building a full-sized Q8 4x4 at a Volkswagen factory in Bratislava, Slovakia, next year and in 2019 add the Q4 4x4 in Gyor, Hungary.

Audi’s new offerings in the fast-growing 4x4 market will compete with forthcoming models from its German rival BMW, which is adding an X2 and an X7 to its line-up in 2018.

“We are integrating two completely new Q models into the existing production network and are raising our competitiveness in an extremely important segment,” Audi production chief Hubert Waltl said.

Audi’s efforts to raise margins with the new vehicles will be helped by low production costs at the chosen sites.

Labour costs in the manufacturing industries of Slovakia and Hungary were an hourly €10.70 (Dh41.70) and €8.40 per worker respectively in 2016, compared with €26.10 in Britain and €33.40 in Germany, according to Germany’s federal statistics office.

Audi last year slipped into third place behind BMW and Mercedes-Benz in terms of luxury car sales. An expanded line-up of 4x4s may also help Audi to gain ground in the United States where it sells many fewer cars than its two German competitors.

* Reuters

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