2006 Annual Report

Audi 2006 Annual Report
2007 Financial Calendar
Annual Press Conference
February 28, 2007
Customer Centre at Audi Forum Ingolstadt
Annual General Meeting
May 9, 2007
Customer Centre at Audi Forum Neckarsulm
Audi
2006 Annual Report
Craft scale
R10 – Le Mans
Auto aspirations
Australia
Lang Lang
The R8 is largely
a handcrafted
product
4,568 km, 423 laps,
24 hours, an historic
victory
An international
comparison
of vehicle trends
7,000 km of desert track:
through the outback
with the Audi Q7
The exceptional
Chinese pianist and
Audi ambassador
Vorsprung durch Technik www.audi.com
Progressive Performance
Shaping the automotive world of the future
AUDI AG
85045 Ingolstadt
Germany
Phone +49 (0)8 41 89-0
Fax
+49 (0)8 41 89-3 25 24
email zentrale@audi.de
Finance Analysis and Publications
I/FF-12
Phone +49 (0)8 41 89-4 03 00
Fax
+49 (0)8 41 89-3 09 00
email ir@audi.de
Communication
I/GP Stephan Grühsem (Head of Communication)
Phone +49 (0)8 41 89-3 40 84
Fax
+49 (0)8 41 89-4 40 40
email communication-corporate@audi.de
Audi Group Key Figures
Production
Vehicle sales
10-Year Overview
2006
2005
Change in %
Cars
926,180
811,522
14.1
Engines
1,895,695
1,695,045
11.8
Cars
1997
1998
1999
German Commercial Code
Production
2000
2001
2002
2003
2004
2005
2006
IFRS
Cars
557,777
619,030
626,059
650,850
727,033
735,913
761,582
784,972
811,522
926,180
Engines
763,928
1,241,351
1,266,896
1,187,666
1,225,448
1,284,488
1,342,883
1,485,536
1,695,045
1,895,695
1,135,554
1,135,554
1,045,114
8.7
905,188
829,109
9.2
Vehicle sales
Cars
546,436
599,509
634,973
919,621
991,444
995,531
1,003,791
971,832
1,045,114
Germany
257,792
247,125
4.3
Audi
Cars
546,436
599,509
634,708
653,404
726,134
742,128
769,893
779,441
829,109
905,188
Outside Germany
647,396
581,984
11.2
Germany
Cars
238,735
244,127
257,642
239,644
254,866
243,650
237,786
235,092
247,125
257,792
2,087
1,600
30.4
Outside Germany
Cars
307,701
355,382
377,066
413,760
471,268
498,478
532,107
544,349
581,984
647,396
228,279
214,405
6.5
Outside Germany
Percent
56.3
59.3
59.4
63.3
64.9
67.2
69.1
69.8
70.2
71.5
Market share, Germany
Percent
6.8
6.5
6.8
6.9
7.5
7.4
7.4
7.2
7.4
7.6
Lamborghini
Cars
–
–
265
296
297
424
1,305
1,592
1,600
2,087
Other Volkswagen Group brands
Cars
–
–
–
265,921
265,013
252,979
232,593
190,799
214,405
228,279
Audi
Lamborghini
Other Volkswagen Group brands
Employees
Average
52,297
52,412
– 0.2
Revenue
EUR million
31,142
26,591
17.1
Profit before tax
EUR million
1,946
1,310
48.5
Profit after tax
EUR million
1,343
824
63.0
Employees
Average
37,761
41,011
45,800
49,396
51,141
51,198
52,689
53,144
52,412
52,297
Revenue
EUR million
11,458
13,918
15,146
19,952
22,032
22,603
23,406
24,506
26,591
31,142
Cost of materials
EUR million
7,568
9,578
10,155
14,539
15,860
16,726
17,163
17,676
19,139
21,627
Personnel costs
EUR million
1,973
2,111
2,291
2,542
2,660
2,739
2,938
3,072
3,136 1
3,440
65,771
EUR
52,251
51,485
50,022
51,456
52,018
53,496
55,763
57,798
59,834 1
Depreciation and amortisation
EUR million
556
885
945
1,179
1,412
1,614
1,833
1,852
1,930
2,515
Profit before tax
EUR million
569
861
839
971
1,286
1,219
1,101
1,143
1,310
1,946
EUR million
188
237
324
725
747
752
811
871
824
1,343
Personnel costs per employee
Rate of return before tax
Capital investments
Percent
EUR million
Development expenditure
recognised as an intangible asset
Depreciation and amortisation
EUR million
6.2
4.9
1,925
1,708
12.7
Profit after tax
625
543
15.1
Share price (year-end price) 2
EUR
70.81
75.16
61.20
59.59
160.00
191.00
225.00
220.15
308.00
540.00
Compensatory payment
EUR
0.61
0.77
0.77
1.20
1.30
1.30
1.05
1.05
1.15
X3
Added value
EUR million
2,606
3,039
3,198
3,590
3,892
4,000
4,287
4,585
4,801
6,156
Capital investments
EUR million
1,006
1,620
1,516
2,378
2,084
2,342
2,047
2,056
1,708
1,925
Cash flow from
operating activities
EUR million
1,020
1,213
1,163
2,058
2,393
2,440
2,786
2,690
3,252
4,428
Non-current assets
EUR million
2,412
3,126
3,679
7,039
7,685
8,308
8,588
8,970
8,597
8,285
Current assets
EUR million
3,182
3,359
3,024
3,219
3,437
4,342
5,475
5,934
7,515
10,625
Equity
EUR million
1,109
1,231
1,441
3,749
4,222
4,761
5,487
5,828
6,104
7,265
Liabilities
EUR million
4,485
5,254
5,262
6,509
6,900
7,889
8,576
9,076
10,008
11,645
Balance sheet total
EUR million
5,594
6,485
6,703
10,258
11,122
12,650
14,063
14,904
16,112
18,910
2,515
1,930
30.3
Cash flow from operating
activities
EUR million
4,428
3,252
36.2
Balance sheet total at Dec. 31
EUR million
18,910
16,112
17.4
Percent
38.4
37.9
Equity ratio at Dec. 31
1
2
3
Figures adjusted for ease of comparison due to the reclassification of anticipated returns on plan assets pursuant to IAS 19.
Year-end price on Munich Stock Exchange.
In accordance with the resolution to be passed by the Annual General Meeting of Volkswagen AG on April 19, 2007.
EDITORIAL
Rupert Stadler,
Chairman of the
Board of Management
of AUDI AG.
Last year Audi took the step of revolutionising the medium of its Annual
Report. The Audi 2005 Annual Report assumed the guise of a high-quality
magazine and the response was overwhelming. This gave us every reason to
remain faithful to the character of a magazine containing diverse journalistic
articles.
Our focal topic this time is “Progressive Performance”. We want to rise to the
challenges of the future. That is why we are approaching them with our eyes
wide open, ready to make the best of them – irrespective of whether they
concern technical innovations, measures to protect the environment or how to
handle demographic change.
And you will find this theme running through our 2006 Annual Report. A great
many renowned journalists have contributed articles, making this publication
very entertaining and interesting to read.
No less interesting is the financial section of this Annual Report, which maps
out yet another record-breaking year for the Audi Group – with unit sales,
revenue and earnings the best to date in the company’s history.
PHOTO: CLAUDIA KEMPF; COVER: PETER KRÄMER
Wishing you an enjoyable read,
Rupert Stadler
Chairman of the Board of Management
AUDI 2006 ANNUAL REPORT
1
THE BOARD OF MANAGEMENT
Dr. Werner Widuckel,
Human Resources
Erich Schmitt,
Chairman of the Board of
Management of SEAT, S.A.
Michael Dick,
Technical Development
Ulf Berkenhagen,
Purchasing
Rupert Stadler,
Chairman of the Board of
Management,
Finance and Organisation
Ralph Weyler,
Marketing and Sales
Frank Dreves,
Production
REPORT OF THE SUPERVISORY BOARD
Audi maintained the positive business trend of recent years
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprü-
in the 2006 financial year and posted new records for produc-
fungsgesellschaft was commissioned with the task of audit-
tion and unit sales for the eleventh time in succession. Mean-
ing the Annual and Consolidated Financial Statements and
while, the key financial performance indicators improved
the management reports of AUDI AG and the Audi Group
yet again – a sign of qualitative growth. Last year, as well as
and subsequently signed these off without qualification.
increasing its revenue the Audi Group boosted its key earnings
The examination conducted by the Audit Committee and
data to the highest level ever.
Supervisory Board likewise revealed no cause for objections,
Against a backdrop of a dynamic global economy, demand
with the result that the Supervisory Board was able to sign off
for cars worldwide likewise reached a new record in 2006.
the Annual and Consolidated Financial Statements at its
At the same time, however, the pressure of competition in the
meeting on February 23, 2007. The annual accounts are thus
car sector became even more intense.
established.
The Audit Committee met on three occasions in 2006 and
“ The Audi Group
again improved its
profitability quite
substantially last year.”
was informed in depth about the Consolidated Financial Statements for 2005, the risk management measures within the
company and the current situation at the end of 2006. It examined the market opportunities and risks on individual markets
outside Europe, as well as the impact of the forthcoming
VAT rate increase on sales in the home market of Germany.
Principal topics for discussion by the Supervisory Board during the past year were the steering of investment spending,
the development of the Audi brand in European markets and
Last year the Audi brand extended its attractive product
the opportunities and risks in the USA and Japan. The Super-
range with an array of new models such as the Audi TT Coupé,
visory Board of AUDI AG approved the further expansion
A4 Cabriolet, A6 allroad quattro and sporty top-end models in
of the model range over the next few years and released the
the S and RS car lines. The market launch of the Audi Q7
necessary financial resources for this.
enjoyed a particularly high profile in 2006. This premium
At its meeting on December 6, 2006, the Supervisory Board
model has met with an enthusiastic reception worldwide, and
endorsed the remuneration model for the members of the
has attracted large numbers of new customers to the Audi
Board of Management of AUDI AG and agreed on the content
brand. In substantially improving its profitability in a year in
of the annual declaration of compliance pursuant to Section
which it launched numerous new models, the Audi Group
161 of German Stock Corporation Law.
demonstrated the effectiveness of its investment management approach.
Audi owes these achievements in particular to the dedi-
There were the following changes to the composition of
the Supervisory Board and Board of Management in the past
financial year:
cation of its management, workforce and the employees’
Dr. Bernd Pischetsrieder surrendered his offices as Chair-
elected representatives. The Supervisory Board takes this
man and Member of the Supervisory Board from the close of
opportunity to thank and congratulate all concerned.
December 31, 2006. The Supervisory Board is deeply grateful
The Board of Management gave regular, up-to-date, com-
and indebted to Dr. Pischetsrieder for his foresight and
prehensive accounts of its actions to the Supervisory Board.
tireless dedication in leading the non-executive directors.
The Supervisory Board discussed in depth with the Board of
Prof. Dr. Martin Winterkorn, Chairman of the Board of Manage-
Management all decisions of fundamental significance for
ment of Volkswagen AG, was appointed his successor by the
the company. The Supervisory Board considered at length the
Local Court of Ingolstadt, upon the application of the Board of
economic situation of the company, business progress, the
Management of AUDI AG, with effect from January 1, 2007. He
business policy and the risk situation, together with the risk
was elected Chairman of the Supervisory Board by its members.
management approach, at four joint meetings and by means
Dr. h.c. Andreas Schleef left the Board of Management of
of written and oral reports from the Board of Management,
AUDI AG from the close of September 30, 2006. The Supervisory
and advised the Board of Management on these matters. The
Board would like to thank Dr. Schleef for his many years of
Presiding Committee met before each Supervisory Board
successful work on the Board of Management of AUDI AG.
meeting.
Erich Schmitt assumed responsibility for the “SEAT, S.A.,
Following in-depth discussions, the financial, personnel
and investment plans were approved on December 6, 2006.
4
AUDI 2006 ANNUAL REPORT
Chairman of the Board of Management” Division on the
Board of Management of AUDI AG from October 1, 2006.
The Supervisory Board appointed Ulf Berkenhagen to the
Board of Management of AUDI AG as Mr. Schmitt’s successor
in charge of the “Purchasing” Division, with effect from October 1, 2006.
Prof. Dr. Martin Winterkorn left the Board of Management of
AUDI AG from the close of December 31, 2006. At its meeting
on December 6, 2006, the Supervisory Board of AUDI AG
appointed Rupert Stadler as the new Chairman of the Board of
Management with effect from January 1, 2007, initially in an acting capacity. The Supervisory Board confirmed Rupert Stadler
in his function as Chairman of the Board of Management at a
special meeting on January 12, 2007, simultaneously ending
his status as acting Chairman. At the same special meeting,
the Supervisory Board in addition appointed two new members to the Board of Management of AUDI AG.
With effect from January 12, 2007, Michael Dick assumed
responsibility for the “Technical Development” Division. On
February 1, 2007, Frank Dreves succeeded Prof. Dr. Jochem
Heizmann, who surrendered office on the company’s Board of
Management with effect from January 31, 2007. The Supervisory Board thanks Prof. Dr. Heizmann for his successful work
at Audi over the past six years.
The Supervisory Board attaches particular importance to
the company management’s assessment of the future development of the Audi Group.
The momentum of global economic growth will ease off
somewhat, in particular as a result of the anticipated economic slowdown in the USA and in many European countries.
This is also likely to hold back the development in demand for
Prof. Dr. rer. nat. Martin Winterkorn,
Chairman of the Supervisory Board of AUDI AG
cars worldwide. The Board of Management has taken account
of the global macroeconomic conditions, which are also
prompting more intense competition in the car industry, in its
corporate strategy.
In an effort to make the Audi brand the most successful
premium brand in the world by 2015, the management and
workforce are therefore working intensively on expanding the
model range. In the first half of 2007, Audi is already unveiling
a number of highlights to take it closer to this objective:
the new TT Roadster, the R8 mid-engine sports car and
the uniquely designed Audi A5. In addition to increasing its
market share in existing markets, the Audi Board of Management attaches particular emphasis to growth markets such as
China and India.
Over and above the statutory minimum requirements for its
role, the Supervisory Board will actively and constructively
continue to assist the Board of Management in achieving its
ambitious strategic goals.
PHOTO: CLAUDIA KEMPF
Ingolstadt, February 23, 2007
Prof. Dr. rer. nat. Martin Winterkorn
Chairman of the Supervisory Board
AUDI 2006 ANNUAL REPORT
5
6
AUDI 2006 ANNUAL REPORT
RUPERT STADLER
Leading the way with
an alert intellect
and innovative power
As new Chairman of the Board of Management of AUDI AG,
Rupert Stadler can rely on the “Progressive Performance” of his
highly motivated team.
A
car manufacturer nowadays has to be
Audi has long been investigating ways of re-
able to act swiftly, flexibly and decisively.
ducing emissions and fuel consumption to a
Only then will it be able to survive the
minimum. As the pioneer of TDI technology, Audi
rough-and-tumble of international competition.
has set standards in cutting fuel consumption.
But for all this alacrity, the minds behind the com-
And in the spectacular triumph of our diesel-
pany also need to think in the longer term. That
powered racing car, the Audi R10 TDI, in the
holds particularly true for Audi. Because we are
Le Mans 24 Hours, we demonstrated the huge
already promoting developments that may only
potential of diesel technology.
acquire market relevance in 20 years’ time. It is
Our latest generation of engines transfers the
therefore important to identify potential early on
advantages of the TDI principle to the petrol en-
and anticipate trends in order to shape them. That
gine, resulting in the high-torque, fuel-efficient
skill necessitates an alert, receptive intellect.
TFSI. This pioneering concept delivers remark-
We at Audi refer to this maxim as “Progressive
able performance in conjunction with low fuel
Performance”. It applies to all divisions of the
consumption. But we are aiming for even more:
company – from Technical Development, through
our objective in Progressive Performance is to
Purchasing, Production, Finance, Human Re-
assure automobility that complies with even the
sources and Communication, to Sales. This
toughest environmental standards – without
attitude prevents us from ever resting on our
sacrificing dynamism and driving fun in the
laurels. Quite the opposite, in fact: Progressive
process. That is why we are working intensively
Performance embodies an iron resolve to do
on alternative fuels and drive principles.
everything that already worked well in the past
PHOTO: CLAUDIA KEMPF
even better in the future.
Progressive Performance therefore also entails
a sense of responsibility. Not just towards the
The prime beneficiaries are our discerning cus-
environment, but also towards the Audi com-
tomers. As premium customers, they are entitled
pany’s workforce of more than 50,000 people all
to products of supreme quality. In acquiring our
over the world. There are numerous ways of
products, they also obtain “Vorsprung durch
meeting these responsibilities. For instance, by
Technik”, that technological advance that we
developing and manufacturing new, attractive
secure through outstanding customer-driven in-
and competitive products. Because the economic
novations.
success of these products safeguards growth
It may take the form of electronic driver assist-
and employment. That is what distinguishes
ance systems that ‘lead the way’ in a dual sense.
Audi: the brand with the four rings wants to be
It may take the form of lightweight vehicle bodies
number one. An ambition that motivates the
comprising the Audi Space Frame and ultramod-
entire team to deliver top performance.
ern joining techniques. Or it may take the form
of technology that makes engines both highperformance and economical.
AUDI 2006 ANNUAL REPORT
7
Audi
2006 Annual Report
Contents
1 Editorial
Audi Chairman of the Board of Management
Rupert Stadler
2 The Board of Management
4 Report of the
Supervisory Board
Prof. Dr. Martin Winterkorn
6 Rupert Stadler on
“Progressive Performance”
FOCUS
PROGRESSIVE PERFORMANCE
12
10 Progressive Performance
Progressive Performance:
optimising the formula
A glimpse of the future
12 Optimising the formula
The Shell PAE lab in Hamburg is researching
synthetic fuels
16 From terra firma to top of
the podium
Diesel fuel from natural gas
18 Fine fuels from farmland
SunDiesel from Freiberg, Saxony
20 A global engine
The new 1.8-litre TFSI engine
22 Lightweight construction
as standard
Aluminium in body manufacturing
ECONOMY
24 Size means strength
Russia – the metamorphosis of a market
28 One world – one brand
Ralph Weyler on the Audi brand
29 International markets
34
Wally yachts: pure passion
A review of Audi locations
30 Quality as a recipe for success
Winning brands
34 Pure passion
Wally yachts
38 Stylish allure
quattro GmbH
39 In brief: economy
TECHNOLOGY
40 High-tech and handcrafted
The Audi R8 production shop
46 Keeping Germany productive
Prof. Dr. Jochem Heizmann on competitiveness
47 Cars seen in a new light
Light-emitting diodes as the light source
of the future
8
AUDI 2006 ANNUAL REPORT
40
Audi R8: high-tech and handcrafted
50 Across Down Under
Audi Q7 Trans-Continental Crossing
56 Audi Australia
Customer service in the outback
57 Cars and archaeology
A mummy in the Audi CT
84
The longest day: with the R10 at Le Mans
58 The seeing diode
News from the electronics powerhouse
of ideas
62 In brief: technology
SOCIETY
64 Breaking new ground
Dr. Werner Widuckel on demographic change
70 Audi TT conquers the world
TT sculpture on tour
72 The world of automotive
dreams
International car trends
76 Learning to win
Education through sport in Brazil
78 Lower costs create higher
quality
Networked working in Purchasing
82 In brief: society
SPORT
84 The longest day
The Le Mans 24 Hours
92 The return of a legend
An automotive aristocrat in the land of the bull
98 In brief: sport
DESIGN
100 Doyens of style
Walter de’Silva meets Giorgetto Giugiaro
104 Can flying really be more
exhilarating?
114
An unconventional photo shoot
Lang Lang: international Audi ambassador
106 Motion and emotion
Frank O. Gehry on the car
120
108 In brief: design
Audi and Chronoswiss: a meeting at the Nürburgring
CULTURE
109 A good feeling
Erich Schmitt and SEAT
110 “Lucky Luc”
Luc Donckerwolke and Michel Vaillant
114 Striking a balance between
feeling and reason
Audi ambassador Lang Lang
118 In brief: culture
FINANCE
120 Butterflies in your belly …
Rupert Stadler and Gerd-R. Lang
125 Audi Group finances 2006
AUDI 2006 ANNUAL REPORT
9
PROGRESSIVE PERFORMANCE
What fuel will we be
using in the future?
What will tomorrow’s
engines look like?
What cars will be
on the roads of the
future?
PHOTO: PAUL C. PET/CORBIS
It is of existential importance to Audi to find answers
to these questions. And this quest repeatedly demands
fresh inspiration. “Progressive Performance” is the
strategy adopted by Audi to promote the responsible use
of our environment and resources. Whether investigating
innovative fuels, developing fuel-saving engines or
specifically trimming weight off designs, Audi’s engineers
and partners are exploring every avenue in order to rise to
the challenges of the future, today. The vast potential that
resides in the synergy of such technological innovations
provides a glimpse of the future.
Meadows shaping the future: they can supply
the biomass that provides the basic material for
the production of high-grade diesel fuel.
AUDI 2006 ANNUAL REPORT
11
Dr. Wolfgang Warnecke,
who is responsible
for Shell’s worldwide fuel
development activities,
scrutinises the colourless
GTL diesel SynFuel.
Shell PAE lab
Optimising the formula
Audi, Volkswagen and Shell are collaborating on
the development of synthetic fuels. Synthetic fuels
are paving the way for new engine concepts that
use fuel much more efficiently and further reduce
exhaust emissions. Shell is carrying out research
work into the fuels of the future in a laboratory in
the port of Hamburg. Text Markus Gärtner // Photos Jens Neumann
12
AUDI 2006 ANNUAL REPORT
PROGRESSIVE PERFORMANCE: POWERED BY SYNFUEL
In the production of
high-grade diesel fuel
from biomass (BTL),
plants are completely
processed.
S
hell Global Solutions’ Products,
SynFuel
Applications and Development
Synthetic fuels, or SynFuels, are produced
manufacturers. “When many of us start-
lab (or PAE for short) is home to
But Warnecke is optimistic about the
from synthesis gas obtained either from
ed studying Engineering,” he recalls, “it
180 researchers who work in close coor-
natural gas or from biomass. If natural gas is
was the case that all manner of concepts
dination with car companies, shipping
the raw material, this is referred to as a gas-
were being created to optimise engines,
firms and even the Formula 1 world to
to-liquid (GTL) process, and if biomass is the
but that the fuel was an off-the-shelf
optimise fuels. The PAE lab is where the
basis, it is a biomass-to-liquid (BTL) process.
product with hard-and-fast specifica-
fuel for Michael Schumacher’s racing
If obtained from natural gas, the fuel is called
tions. The position now is that engines
cars was created. And it also formulated
SynFuel and if from biomass, it is referred to
are being developed to suit the fuels. The
the special diesel fuel which the Audi
as SunFuel.
fuel has become one of the key para-
R10 TDI used to win the Le Mans 24
meters.” In a nutshell, the fuel researchers
Hours and the American Le Mans Series
from Shell are increasingly encountering
at the very first attempt last year.
innovations at the hardware end in their
Marked reduction in pollutants
partnership with Audi and Volkswagen.
more than just high revs. It is preparing
The synthetic fuel significantly reduces
Fuel and engine development activities
the way for an even more environmen-
pollutant emissions, assures Dr. Wolf-
are proving mutually beneficial.
tally friendly future. One of the stan-
gang Warnecke, Director of the PAE lab.
GTL is still a relatively new process.
dard-bearers of this advance is the
Warnecke is responsible for Shell’s
Shell has been producing SynFuel in
gas-to-liquid (GTL) fuel which is ob-
worldwide fuel development activities.
Malaysia for the past few years, at the
tained by converting natural gas into
The engine and fuel expert refuses to be
rate of 14,700 barrels per day. Two years
synthesis gas with the aid of oxygen
drawn on precisely how low-pollution
ago, GTL fuel was launched at the group’s
and steam, and then into liquid hydro-
it is. Because reducing pollutants de-
European filling stations under the name
carbon. High-grade fuel for diesel en-
pends very much on making exhaust
of V-Power diesel. Others are following
gines is then derived from this by frac-
emissions treatment more effective and
suit: the South African energy group
tional distillation. The colourless and
combustion methods more efficient.
Sasol is opening a second industrial
odourless liquid is sulphur-free. It con-
Such factors are determined by engine
plant in Qatar in the first half of 2007.
tains neither aromatic compounds nor
developers at car companies rather
organic nitrogen.
than fuel experts.
But the PAE lab concerns itself with
Shell intends to erect a large-scale
plant, again in the Emirate of Qatar,
AUDI 2006 ANNUAL REPORT
>>
13
14
AUDI 2006 ANNUAL REPORT
PROGRESSIVE PERFORMANCE: POWERED BY SYNFUEL
Alternative: bio-ethanol
by the end of the decade. It will be
“Hydrogen will definitely arrive, but
The Canadian biotech company Iogen, based
around ten times the size of the
not to any substantial degree over the
in Ottawa, operates the only demonstration
Malaysian plant, turning out 140,000
next 20–25 years,” predicts Warnecke.
plant in the world that produces cellulosic
barrels per day. The International Energy
“So we will need an interim solution to
ethanol from agricultural waste, such as
Agency (IEA) predicts daily production
tide us over when making the transition
wheat stalks, maize cobs and straw. Enzymes
of GTL fuel to reach 2.4 million barrels
from carbon to hydrogen: synthetic
break down the residue from harvesting into
by 2030. To place this in its context,
fuels which can increasingly be added
a sugary mass from which alcohol is distilled.
consumption is currently running at
to present-day fuels.”
As it comprises waste products, the environ-
around 90 million barrels of mineral oil
mental balance is virtually neutral. The yield
per day.
per hectare of land is moreover much higher
“It is not yet clear how many plants
The breakthrough will depend on
a variety of factors
than for conventional ethanol. 340 litres of
there will be in the next ten years and
Superior availability and the much low-
ethanol are obtained from every tonne of
how available they will be,” admits
er emissions alone will, however, not
cellulose. The cost is currently around 36 US
Warnecke. “By 2015, GTL will account
suffice to help fuels such as GTL diesel
cents per litre. Iogen is planning to build the
for a mere three or four percent of the
make a breakthrough as long as they are
world’s first large-scale ethanol production
entire amount of fuel refined,” declares
unable to compete in price terms. In
plant in 2007, probably in the US state of
Warnecke, an engine designer by back-
Germany, around 70 percent of diesel
Idaho. The US government is calling for cellu-
ground, confirming the IEA forecast.
fuel is used by trucks and buses which,
losic ethanol to be available at filling stations
That is why other alternative fuel sources
Warnecke warns, are “extremely cost-
at competitive prices within six years. It is
also need to be tapped, such as second-
sensitive”.
already being mixed with conventional petrol.
generation biofuels (biomass-to-liquid
The EU is aiming to boost biofuels
Expectations of the Iogen process are so high
BTL) which, unlike first-generation bio-
from a current two percent to six per-
that the investment bank Goldman Sachs
fuels – where only the oily fruit is used –
cent of entire fuel consumption by 2010.
invested in the company in May 2006. At the
use the entire plant or even green waste.
But the legislative body has not yet tak-
BTL fuels have the advantage that
en account of all the benefits of modern
partnership with Iogen to pioneer the tech-
their carbon dioxide balance is virtually
biofuels in calculating the tax incen-
nology for cellulosic ethanol and examine the
neutral. They can reduce CO2 emissions
tives: “The EU Commission – which lays
scope for building an industrial-scale plant
by over 90 percent compared with fuel
down the standards – really needs to
in Germany. The head of the company is
produced from mineral oil.
take account of how the fuel is pro-
start of 2006 the Volkswagen Group agreed a
This is why Shell has invested in the
duced as well. Focusing solely on what
the enzyme manufacturer into one of the
biofuel manufacturers CHOREN and
comes out of the exhaust pipe is not
leading players in the highly promising
Iogen. “We want to provide assistance
enough. That’s why the German govern-
market for biofuels.
of both a financial and technological
ment is now providing tax incentives
nature in promoting methods such as
for fuel obtained from sustainable raw
those being pioneered by CHOREN and
materials,” explains Warnecke.
engineer Brian Foody. Foody has developed
Iogen, and we want to use these fuels.
Shell’s senior fuel developer is allud-
Iogen is the leading player for petrol
ing here to the complex processes that
substitutes, and CHOREN for diesel sub-
Shell is developing together with its
stitutes,” explains Wolfgang Warnecke.
partners Iogen and CHOREN. Considerable investment will still be needed be-
GTL as an interim solution
fore the first plants are able to go into
GTL technology is of course being
production on a large scale.
pursued as a top priority. According to
Warnecke, the synthetic diesel is economical to produce even at a crude oil
price of 25 US dollars a barrel. GTL is
PHOTO (BOTTOM): AUDI
nevertheless unable to keep pace with
Top: Dr. Warnecke regards
the production of diesel from
natural gas or biomass as
an intermediate step along
the road to the hydrogen age.
Bottom: For well over two
years now, drivers have been
enjoying the benefits of Shell
V-Power, the fuel produced
by the gas-to-liquid (GTL)
process, for example at the
World Economic Forum 2007
in Davos.
conventional fuels in price terms. But it
Markus Gärtner, 46, has been re-
does have a huge strategic advantage:
porting from Vancouver as an inde-
according to current estimates, the
pendent correspondent since 2004.
world’s gas reserves will last 70 years –
He was previously Bavaria reporter
30 years more than our crude oil re-
for the Deutschlandfunk radio station,
serves. Sufficient time, therefore, to
Frankfurt correspondent of the ARD television
use biofuels as a wise interim solution
station, Southeast Asia correspondent for
until the hydrogen age has properly
Die Welt and Handelsblatt’s man in China for
dawned.
six years.
AUDI 2006 ANNUAL REPORT
15
PROGRESSIVE PERFORMANCE: POWERED BY SYNFUEL
GTL technology
From terra firma
to top of the podium
The Audi R10 TDI, running on top-quality fuel from Malaysia, proved
unbeatable on the Le Mans race track in 2006. The world’s largest
natural gas processing plant is located in Bintulu. Text William Whey
S
hell’s gas-to-liquid (GTL) tech-
the only light one notices is from the
“tour guide”. Thanks to his vivid descrip-
nology is instrumental in pro-
beacon that outlines a large vessel just
tion of how the natural gas is converted
ducing diesel fuel that is not
off the shores of Bintulu.
to liquid fuel, I learnt a lot and came to
only more powerful, but efficient and
It is almost surreal that idyllic Bintulu
understand how the clear and odour-
environmentally friendly at the same
is where the world-class, high-tech syn-
less product that this plant produces is
time. The ability of Shell to turn natural
thetic fuel (SynFuel) is produced – the
SynFuel – the same that Audi engineers
gas into diesel fuel with 50 percent bet-
very same fuel that powered the Audi
use to power their R10 race car.
ter combustion quality than normal re-
R10 TDI race cars into motor-racing
The fuel produced is so “pure” and
finery diesel is a marvel in its own right.
history. This was the first time that a
powerful that the Audi R10 summoned
The engineers at Audi took advantage of
diesel-powered race car had taken over-
its most formidable SynFuel-powered
this virtually sulphur-free diesel and
all victory at Le Mans.
cars to do battle with its fossil fuel rivals
harnessed maximum potential from it
The fuel that was used in the V12 fitted
on the asphalt at Le Mans. The version
to power the Audi R10 TDI to victory at
in the Audi R10 TDI started its journey
used in the Audi R10 may never make
Le Mans 2006.
20 km offshore from the Central Luconia
it into the fuel tank of a normal diesel
oil and gas field, off the coast of Bintulu.
vehicle (then again, a normal diesel
From terra firma …
The natural gas that is piped in is clever-
vehicle isn’t expected to produce 650
Sarawak, East Malaysia – miles of pris-
ly transformed into a series of different
horsepower and 1,100 Nm of torque
tine white, sandy beaches, cloaked in a
products, ranging from naphtha, kero-
either!), but is currently blended and
green blanket of rain forests. Then
sene, gasoil, solvents, drilling fluids and
sold as Shell V-Power diesel throughout
there’s Bintulu – a sleepy coastal fishing
waxes. The entire process utilises a
Europe and Thailand, and enjoyed by
and timber trading town. The idyllic
labyrinth of concrete, pipes, pumps,
hundreds of thousands of vehicles.
setting belies its world status. The natu-
vents, and massive finished product
ral gas reserves just off the shores of
storage tanks.
… to top of the podium
Bintulu have transformed this terra
Nothing unusual you might think. Un-
With the aid of this top-quality diesel,
firma into the world’s single largest nat-
til you see the plant. The Shell Bintulu
the R10 is virtually untouchable when it
ural gas processing plant.
plant is distinctively clean for a “refin-
comes to endurance on the track. The
However, the development of Bintulu
ery”; even the bio-sludge can be used as
ability of the R10 to stay on the Le Mans
into a major natural gas centre has not
a soil improver for local agriculture. Just
track for two more laps per 90-litre tank
affected the soul of the place. This is
from the look of the plant, I would never
of diesel fuel compared to its petrol-
still a pretty much laid-back town that
have guessed what lies beyond, and
dependent competitors gave the R10
exhibits the rustic feel of the 70s. The
could have mistaken it for a giant food
the decisive edge. This translates to an
hustle and bustle of the city slows to a
processing facility. Visually, the plant is
average speed of 233 km/h and a car
strolling pace at dusk. Time in Bintulu
impressive with many huge cooling
capable of lapping the Le Mans circuit
just ticks away – a minute at a time.
fans and steam occasionally venting
in 3 minutes and 30 seconds.
“Calm, nonchalant and comfortable” –
from the ground.
And thus it came to pass on 18 June,
that’s the motto of the locals. The
During this visit, Willem Scholten,
2006 that the R10, with the help of the
evening fades into pitch darkness, and
Shell’s Senior Technologist, was my
humble methane gas from the off-shore
16
AUDI 2006 ANNUAL REPORT
The new technology contributes to clean air
The Audi TDI programme dates back to the late 1980s as a revolt against
the smelly, rattling diesel which was the only alternative means of
transport based on better fuel economy. The seemingly unattainable
development goal which Audi set itself brought the TDI programme
into existence. Fast forward to the year 2006 – no car manufacturer
has ever attempted to win a sports car race such as Le Mans with
a diesel-engined race car. Having taken three successive victories at
Le Mans, the Audi motor-racing veterans saw in the new set of
regulations stipulated by the organisers the chance to field a dieselpowered race car. For Audi, a company which firmly believes in taking
on seemingly impossible challenges, this proved to be an excellent
opportunity to change people’s view of motor-racing – and indeed of
diesel-powered cars!
The intricate V12 powerplant at the heart of the R10 is a diesel unit
with racing genes. The ultimate challenge was to develop an engine
which would develop 650 horsepower and 1,100 Nm of torque reliably.
This required special piston geometry and exceptionally reliable
build quality. The racing diesel also had to embody the virtues of the
Audi TDI road cars. The engine had to be quiet with minimal exhaust
emissions and improved fuel economy.
fields of Bintulu, captured the race
number. Compared to other “sulphur-
trophy and triumphantly took the top
free” diesels, sulphur-free Shell V-Power
step on the podium – a truly historic
diesel leads to greater reductions in lo-
moment. This signified the end of the
cal pollution and is convenient and easy
gruelling race but marked the begin-
to use, without the engines having to
ning of a new chapter in the world of
undergo any significant modifications.
motor-racing.
Shell V-Power diesel containing GTL fuel
This commitment from Audi and Shell
is already available in a host of Euro-
ushered in an era of performance-
pean countries. It is available on trial in
oriented vehicles that are not only effi-
the USA, the UK and China in its pure
cient, but extremely fast to drive too –
GTL form. Vehicles using this fuel have
making it possible to drive the future
benefited from lower fuel consumption,
today.
reduced emissions, less engine noise
and better driveability.
Smell the roses
Shell has been working on gas-to-liquid
(GTL) technology since the 1970s. The
wide-scale commercialisation of this
technology will benefit our environment
without any negative effect on the way
William Whey (Singapore) indulges
we live. The liquid produced is clear and
his passion for cars as an author
odourless. Without proper labelling it is
for various automotive titles
PHOTOS: SHELL
nearly impossible to distinguish it from
and columns. He also works as a
water with the human eye or nose.
consultant for a leading tyre manufacturer
The diesel produced by this method is
and for the Automotive Association of
clean-burning thanks to its high cetane
Singapore.
Above: A friendly smile
for a “clean” project.
The locals live a calm,
nonchalant life.
Below: A view of the
natural gas processing
plant in Bintulu.
Energy of the future
Fine fuels from farmland
Wood, plants and compost are all serving as sources of
a top-grade diesel fuel. The CHOREN company manufactures
SunDiesel fuel at Freiberg, Saxony. A clever move that is
also helping the environment. Text Peter Weißenberg // Photos Jens Neumann
Managing Director of
CHOREN Carlhans Uhle
plans to have the new
SunDiesel plant in operation by the end of 2007.
Dietmar Rüger, Head of
Process Engineering,
is proud of the CHOREN
facility that supplies
particularly highperformance biofuel.
PROGRESSIVE PERFORMANCE: SUNDIESEL FUEL
D
ietmar Rüger would love to tell
400 million years in 20 minutes
his family about his “day at the
How CHOREN makes diesel from wood, compost and plants
office” when he gets home at the
2
3
end of a long day. After all, the 46-yearold is rather proud of what he does. “But
my daughter isn’t really interested,” says
Rüger, shrugging his shoulders. Well,
1
how many twelve-year-old girls really
want to hear about synthesis gases made
from carbon monoxide and hydrogen?
Perhaps the Head of Process Engineer-
1
Carbo-V process: the stored
biomass is first converted
into solid carbon and gas
fier operating at temperatures
of carbon dioxide are still
of up to 1,600 degrees Celsius.
present. This gas is then further
2
The organic compounds are
processed.
ing at the CHOREN company should
containing tar in a gasifier at
unable to withstand such high
adopt the following approach: “I’m turn-
around 500 degrees Celsius.
temperatures, which produce a
ing German farmers into the oil sheikhs
These products are passed
synthesis gas (carbon monoxide convert the purified synthesis
of the future.” Even a teenager might
separately into a second gasi-
and hydrogen) in which traces
3
CHOREN uses the subsequent
Fischer-Tropsch process to
gas into the biofuel SunDiesel.
find that almost as exciting as being able
to declare: “My dad’s a horse whisperer!”
In the eyes of engine or fuel developers
and the prime movers of environmental
branches and trunks are all transformed
into precious diesel fuel in 20 minutes.
or economic policies everywhere from
the world are clamouring to attract this
reference facility to their own region. His
China to California, Rüger’s work ap-
Fully biodegradable
expert, Rüger, is currently in the process
pears even more exciting. They are al-
“Our first economically operating plant
of training new chemists and machine
most queuing up, safety helmet in hand,
will be completed here by the end of
operators, and amid a forest of steel
to view CHOREN’s football-pitch-sized
2007,” explains 48-year-old Uhle, sur-
tanks the size of a small car, with fire-
construction site in the foothills of the
rounded by 20-metre-high steel scaffold-
red cladding the thickness of a person’s
Ore Mountains. That is where, on the
ing; they will soon be supporting a com-
arm, explaining precisely how the top-
edge of the small town of Freiberg, spe-
plex pipework structure that will cool
secret plant is operated. That is one of
cialists such as the wiry Saxon are build-
down the gases from the biomass and
the key reasons why the Volkswagen
ing a chemical plant that could help to
transform them into the precious fuel.
Group, another of CHOREN’s backers,
solve the energy problems of the future –
At the rate of 16,000 tonnes a year. A
would prefer it to be sited in Germany.
and reconcile economics with ecology:
test facility just alongside it has already
But the SunDiesel idea can in principle
Rüger and his colleagues are making
delivered incontrovertible proof that
be applied wherever there is vegetation.
one of the cleanest fuels in the world
CHOREN’s “magic” process for making
It seems almost paradoxical at a time
out of wood, green waste and compost:
diesel fuel genuinely works.
when oil and gas are in short supply, but
Uhle,
CHOREN’s specialists perceive ample
Even the name of Rüger’s employer,
“SunDiesel isn’t just any old biofuel.” It
potential for raw materials. By as early
CHOREN, hints at its agenda: C for carbon,
delivers much more energy – and does
as 2025, as much as a quarter of all
H for hydrogen, O for oxygen and REN for
not do any more damage to the global
diesel fuel used in Germany could be
renewable. The latter is the main objec-
climate than plants such as the gera-
produced domestically.
tive of this pioneering company, in which
niums on Uhle’s balcony. It is not even a
Dietmar Rüger is not the only one to be
the petrochemicals giant Shell holds a
particular problem if residues from the
convinced that a network of SunDiesel
stake of around 25 percent. “We want to
liquid seep into the ground. “That’s be-
plants will be supplying fuel to German
recreate the natural cycle at our plant,”
cause our fuel is entirely biodegradable,”
car drivers within as little as a decade. By
explains management expert Carlhans
beams the financial expert Uhle. Every
then, even his daughter might realise
Uhle, one of the three directors, as he sur-
user of conventional diesel will more-
how proud she can be of her father –
veys the gently rolling hills dotted with
over appreciate the fact that SunDiesel
every time she calls in at the filling
forests and fields as far as the eye can
is crystal clear and entirely odourless.
station.
SunDiesel.
ILLUSTRATION: CHOREN
managers and politicians from all over
Particularly
importantly
for
see. These are CHOREN’s green oilfields.
In 2009 CHOREN will be building its
Plants use the sun’s energy to grow,
first plant of an economically optimal
then decompose into energy sources
scale: it has a designed annual capacity
such as coal, natural gas or, as illustrated
of 200,000 tonnes of SunDiesel. “It will
Peter Weißenberg, 41, is Head of
in this specific instance, oil. A process
need a catchment area of around 30 kilo-
the Business and Consumer Sec-
that normally takes 400 million years.
metres, with forests and farmland,” adds
tion and Deputy Editor-in-Chief of
The Freiberg company has recreated in
Uhle. The pioneering company already
the Sächsische Zeitung newspaper.
a patented process what otherwise takes
owns a suitable site in Mecklenburg-
Born in Wuppertal, he has also written several
eons – stumps, sticks, flowers and fruits,
Western Pomerania. But at present,
books on business and the stock market.
AUDI 2006 ANNUAL REPORT
19
PROGRESSIVE PERFORMANCE: ENGINE DEVELOPMENT
Convinced of the success of the new 1.8-litre TFSI:
Wolfgang Hatz, Head of Powertrain Development
for the Volkswagen Group.
T
he complex in which Audi’s
engine developers are based at
Ingolstadt is a veritable micro-
cosm. A maze of stairways, offices and
TFSI: high-performance and economical
A global engine
The Head of Powertrain Development for the
Volkswagen Group, Wolfgang Hatz, regards the
combination of a turbocharged petrol engine
and direct injection as the “concept of the future”.
The new 1.8-litre TFSI engine, appearing first in
the Audi A3 and the new Audi A5, serves to confirm
this prediction. Text Johannes Köbler // Photos Angelika Emmerling
workshops, many of them spacious and
bright, others tucked away in obscurity,
epitomise AUDI AG’s rapid-fire growth
over the past few decades. The man at
the helm of this nerve centre of the
company’s operations is Wolfgang Hatz,
born 1959, Head of Powertrain Development at AUDI AG and since February 1,
2007 for the Volkswagen Group.
One particular storey, in a grey-floored
open-plan office, is home to the CAD developers. This is where the ultramodern
engines first begin to take shape. What
exactly were the main objectives of “Development Order No. 888”, issued four
years ago? Hatz enumerates them: “As
well as plenty of power and torque, ample refinement, low fuel consumption
and the potential to meet the most
stringent emission limits, the core task
20
AUDI 2006 ANNUAL REPORT
of this new generation was to optimise
A watercooled turbocharger forces the
Gyó´r, in Hungary, it will be produced at
costs quite substantially.” This was the
air into the combustion chambers, and
the
mission of the turbocharged 1.8-litre
a newly developed injection system in-
plant in Dalian, China. “We will ramp up
engine with direct injection – a principle
jects the fuel at 150 bar. These two tech-
production to around one million units
with which the 2.0 TFSI is already enjoy-
nologies are an ideal match, because
a year relatively quickly,” declares Hatz.
ing eminent market success.
the directly injected petrol cools down
“And the engine’s codename 888 is regarded as a lucky number in China.”
brand-new
Volkswagen
engine
Wolfgang Hatz is staking out the ter-
the combustion chambers and allows a
rain with the 1.8 TFSI, which is about
high compression ratio. Audi has al-
to make its debut in the Audi A3* and
ready demonstrated the huge potential
“Really fun to drive”
the new Audi A5*: “Audi is already the
of the TFSI principle with its R8 racing
A white S3* is standing outside the
biggest manufacturer of turbocharged
car on circuits all over the world.
building – its TFSI, a two-litre version,
petrol engines with direct injection. I’ve
“Yes,” says Hatz, his eyes lighting up,
developing 195 kW (265 bhp). “This car
been convinced for years that this is the
“we have been helping to plan all these
really is fun to drive,” exclaims Hatz,
concept of the future, akin to the TDI in
technologies right from the outset.” The
climbing into the driver’s seat. “0 to 100
the domain of diesel engines.”
basic concept of the successful prede-
in 5.7 seconds! Such compelling per-
The engine workshop on the ground
cessor generation goes back to 1972. It
formance really turns the heat up on
floor is a hall with workbenches and
was constantly refined in an effort to
quite a few six-cylinder engines. I like its
measuring equipment. Hatz greets the
keep abreast of changing requirements
sporty sound, though I think we could
mechanics with a handshake and heads
over this period of 35 years. “But we
increase it just a touch – we’ll see.”
for a specimen of the new TFSI. “See
eventually reached a point where it was
We roll back into the yard. Hatz climbs
here,” his Baden accent blending in-
better to make a clean break with the
out and enjoys a cigarillo before hurrying
congruously with his Bavarian turn of
past, all things taken into consideration.
off to his next appointment. All part of
phrase, “This is the new, virtually no-
And that’s precisely what we did with
the business of developing even better
maintenance toothed chain for the
our “Global Engine”. An opportunity like
engines for an even stronger future.
camshafts. And here are the balancing
that doesn’t come along very often, with
shafts. We have relocated them inside
the entire business costing several hun-
the crankcase. That cuts costs and pro-
dred million euros.”
“Modern technology is immensely
duces more effective mass balancing.
The 1.8 TFSI represents a major stra-
We used grey cast iron for the engine
tegic advance for Audi on the world’s
casing for acoustic reasons, but it still
markets. It will be built in six different
journalist, who is as much at home
weighs only 33 kilograms.”
versions, cover an extensive perform-
in the print sector as in the world of TV and the
Next port of call: the engine test rigs –
ance range and be available in numer-
online sector, has been monitoring develop-
soundproofed chambers containing a
ous different countries. As well as at
ments in the car industry for the past 15 years.
forest of wiring harnesses and exhaust
pipes as thick as your arm. The technician at the control desk moves up the
The Audi 1.8l 4V TFSI engine
control, causing the displays on the
Development codename: 888; displacement:
monitor to rush by up to a speed of
1,798 cm3; stroke: 84.1 mm; cylinders: 4;
6,500 rpm. A glance through the safety-
cylinder spacing: 88 mm; crankshaft
glass window reveals the manifold
bearings: 5; power output: 118 kW (160 bhp);
glowing red-hot at a temperature of 950
torque: 250 Nm; average fuel consumption
degrees Celsius. “It develops 118 kW –
(on the Audi A3): 7.3 l/100 km; fuel type
that’s 160 bhp – and 250 Nm torque,
RON: 95/91; emission standard: EU IV; engine
from an engine speed of just 1,500
casing: grey cast iron; engine casing weight:
rpm,” comments Hatz. “Our new 888 is a
33 kg.
downsizing concept. It delivers the per-
Despite the additional balancer shaft assembly
formance that we were getting from a
and high-pressure injection system, this
six-cylinder engine a couple of years
engine is 1 kg lighter than its predecessor.
back, but its fuel consumption is much
lower.”
Newly developed injection system
The low fuel consumption – averaging
7.3 litres per 100 kilometres in the A3 –
is also due in part to the combination of
turbocharging with FSI direct injection.
The engine has to withstand intensive
tests on the engine test bench.
* fuel consumption figures at the end of the Annual Report
enjoyable”, believes Johannes
Köbler (44). The freelance motoring
PROGRESSIVE PERFORMANCE: BODY MANUFACTURING
Hybrid construction
Lightweight construction as standard
Audi has secured a leading place in the automotive
world through the use of aluminium. But there is still
ample scope for new developments in lightweight
construction. The body of the new Audi TT represents
a further step in this direction and demonstrates
the potential shape of “intelligent lightweight
construction”. Text Michael Kirchberger // Photos Jens Neumann
Dr. Klaus Koglin (left) and Frank Dreves with the
bodyshell of the new Audi TT Coupé. A veritable
featherweight at just 206 kilograms – around
100 kilograms less than the predecessor model.
W
hen the first generation of
electrochemical series. As soon as an
the Audi A8 made its debut
electrolyte such as rainwater comes in-
in 1994, its lightweight de-
to contact with both of them, corrosion
sign concept based on an aluminium
occurs. ”The aluminium corrodes in the
frame structure that was referred to as
process,” continues Koglin. They con-
the Audi Space Frame (ASF) and clad
sequently need to be isolated. Audi
with aluminium panels caused a real
achieves this by using adhesives that on
stir. At the “EuroCarBody” congress, the
the one hand act as insulators and on
the other hand increase the rigidity of
knowledge exchange forum for body
developers, planners and manufactur-
Joins made from wax
the join. Fine-seam trims made from
ers, this ground-breaking technology
Joining together body components on the TT
PVC reliably seal off cut edges.
scooped first prize. There then followed
by means of rivets, bolts, bonding and weld-
the Audi A2, which proved that alumin-
ing is a science in its own right. Because steel
largely been adopted from the A2. The
ium can also lend itself to use in volume
and aluminium have different coefficients of
production facilities were moved from
production. The brand with the four
expansion as they become warmer. And solid
Neckarsulm to Ingolstadt for this pur-
rings repeated this success with the
lubricant is needed in aluminium forming, an
pose, securing what Dreves terms “a
current Audi A8, once more capturing
ultra-thin wax coating applied at the rate of
significant reduction in the costs of TT
the EuroCarBody Award. Aluminium
only one gram per square metre of material.
production”. But the finer points of alu-
panels have now been integrated for the
This wax coating allows “frictionless” forming
minium expertise go much further than
first time into a steel body on the cur-
of the aluminium. The chemical properties
this. In arc welding, for instance, it is
rent Audi A6. Finally, in 2006 the new
of the adhesive applied to the surface mean
important to perform welding in the so-
Audi TT made its debut initially as the
that it incorporates the wax coating into its
called flat position if a high-quality weld
Coupé, then as the Roadster. It should
structure, thus producing a secure bond.
seam is to be achieved. That is why Audi
The TT’s production techniques have
come as no surprise to learn that Audi
uses robots operating as an ensemble
received the 2006 award for the pioneer-
in the 98 percent automated production
ing construction of the TT’s body.
process. While one of the two robots is
“A
hybrid
construction
performing the welding work, the other
approach
brings the weld point into the ideal flat
proved to be ideal for this vehicle concept,” explains Dr. Klaus Koglin, Head of
has actually increased by over 100 per-
Technology Development at Audi. The
cent compared with the previous ver-
A glance at the finished body bears
combination of the materials alumin-
sion. It is furthermore possible to build
testimony to the quality standards
ium and steel has meant that the TT
both model versions on the same pro-
which Dreves sets. The lines along the
weighs more precisely at the points
duction line. This introduces a high de-
sheet metal surface of the TT, an unerr-
where this is necessary. Above all the
gree of variability into the production
ing measure of an outstanding body fit,
use of steel at the car’s rear has pro-
process, thus cutting costs.
resemble the work of a car-obsessed
position.
artist-cum-aesthete.
duced an improved axle load distribution – with the welcome effect that the
Special production technique
sporty 2+2-seater exhibits a finely bal-
The production of the TT is in any case
will be steadily developing applications
anced weight distribution between the
both a fascinatingly complex and sur-
of aluminium over the next few years
front and rear axles, unquestionably
prisingly illuminating example of how
because this material will continue to
enhancing its agility. “The bodyshell of
deeply intertwined production technol-
play an instrumental role in determin-
the new TT Coupé weighs 206 kilo-
ogy and know-how have become over
ing innovative body concepts.
grams; that’s about 100 kilograms less
the years since Audi embarked on alu-
than its predecessor, despite the body’s
minium construction. Frank Dreves,
larger dimensions,” calculates Koglin
AUDI AG Board Member for Production
out loud.
since February 1, 2007, describes the
This result provides an ideal basis for
According to Koglin and Dreves, Audi
process as modular production islands
the developers. A low centre of gravity
that come together on the line, rather
and an improved axle load distribution,
than as a conventional form of conveyor-
in conjunction with high rigidity, make
line assembly. “Only this method enables
Michael Kirchberger, born 1957,
for sporty handling. The body’s rigidity
a smooth combination of modern alu-
is a freelance car journalist who
is 49 percent higher than that of the
minium with traditional body-grade
writes regularly on technology and
first-generation TT. Even the Roadster’s
steel,” explains Dreves.
automotive developments for such
torsional rigidity has improved substan-
These two materials are fundamen-
tially, despite there being no reinforcing
tally incompatible. Iron and aluminium
Zeitung, AUTO ZEITUNG, other trade journals
effect of a sheet metal roof. Its rigidity
are elements with different values in the
and daily newspapers.
publications as the Frankfurter Allgemeine
AUDI 2006 ANNUAL REPORT
23
ECONOMY: RUSSIA – THE METAMORPHOSIS OF A MARKET
The Russian economy is now advancing in leaps
and bounds thanks to increasing exports of raw
materials, rather than the hammer and sickle.
Size means strength: Russia –
the metamorphosis of a market
A gush of income from gas and oil sales have set Russia’s tills
ringing and precipitated the country’s astonishing economic
boom. The heirs of the Communist era are now confidently claiming a leading role in the global economy. The biggest territorial
state on earth was once an economic midget. Those days are now
long gone – Russia is a force to be reckoned with. Text Daniel Brössler
24
AUDI 2006 ANNUAL REPORT
fireworks display can be seen punctuating
here every year. Shopping sprees have long
Russian companies heading for
the top
virtually every night in this giant metropolis.
since ceased to be the exclusive preserve of the
After a dramatic process
Someone, somewhere, will always find an ex-
rich and beautiful. Ordinary Muscovites now
of concentration, compa-
cuse for a party, and when the champagne corks
head in droves for Swedish furniture stores and
nies previously barely
start popping the chances are it will be a Cuvée
French supermarkets, where between them they
known in the West are
Belle Epoque. Moscow is a city of millionaires.
spend a breathtaking amount every day.
now among the world
PHOTOS (LEFT): JOHN LAMB, (RIGHT): JONATHAN SMITH/GETTY IMAGES
I
t’s party time in Moscow. The boom of fire-
because Moscow is also home to a burgeoning
crackers and the colours of an extravagant
middle class which registers 100,000 new cars
Anyone who is seriously in the money here will
As recently as twenty years ago, all this would
not blink at forking out 1,000 euros for a bottle.
indeed have sounded like the stuff of fairy tales.
areas. Russia’s largest
The view in Moscow seems to be: why be wealthy
Back then, in the days of the Soviet Union,
group, Gazprom, is on
if you can’t flaunt it? There are more expensive
people spent much of every day merely trying to
course to becoming the
limousines circulating on this city’s roads than
get by in an economy where everything was in
world’s leading energy
virtually anywhere else in Europe. Not that they
short supply. Instead of traffic jams, there were
company.
are immune to becoming stuck in traffic jams,
queues outside grocery stores. When the
leaders in their respective
>>
AUDI 2006 ANNUAL REPORT
25
100,000 new cars are registered
each year in Moscow. Red Square
(above) is one of the few places
where traffic is excluded.
Milestones in
the emergence
of a giant
trading partner
Communist regime was finally consigned to the
never made any secret of their ambitions: they
history books, it left behind it a mass of impover-
want to be among the world leaders. Whereas
ished citizens and a tottering giant by the name
Western ears were still unaccustomed to names
of Russia. Its efforts to make the switch to a cap-
such as Lukoil, Severstal and Norilsk Nickel as
As the biggest territorial
italist system were fraught with pitfalls. The
recently as a few years ago, they are now recog-
state in the world, Russia
country long remained the continent’s problem
nised as competitors to be taken deadly serious-
has rich gas and oil re-
child: deeply in debt, wayward, and dependent
ly. Lukoil’s ambition is to become the largest oil
serves. The resulting
on outside help.
company in the world, Severstal the secondlargest steel producer, and Norilsk Nickel aims to
revenues enable Russian
managers to go on a
Russia’s image has undergone a transformation
secure the rank of the world’s biggest mining
shopping spree in the
Russia has paid off its debts, is brimming with
company. And Russia’s largest group, Gazprom,
West in an effort to shore
confidence, is disdainful of outside interference
is on course to becoming the world’s leading
up the cyclically exposed
and yet is an attractive proposition for investors.
energy company. The company is already the
raw materials trade.
What has happened? First of all, there have been
biggest gas producer in the world and boasts
Meanwhile, Russia’s
political changes. In 2000, the successor as Presi-
impressive figures: market capitalisation of al-
influence on the global
dent to the ailing Boris Yeltsin was Vladimir Putin.
most 200 billion euros at February 2007, and a net
The Russian economy has undergone a radical
profit of almost six billion euros in 2005. All this
along with its admission
change during Putin’s time in office. The state
leaves Gazprom’s managers with ample cash for
to the World Trade Orga-
has promoted a huge process of concentration.
a few shopping excursions. They are on the look-
nization (WTO).
The gas monopoly Gazprom has taken over Sib-
out for investment targets particularly in Western
neft, the oil company of the fabulously wealthy
Europe, because Gazprom now craves red meat –
Roman Abramovich. The state oil company Ros-
in other words, lucrative end-consumer business.
economy is growing
neft has succeeded in gaining control of large
chunks of Michail Khodorkovsky’s Yukos Group.
26
The British, Germans and Italians are illprepared for this onslaught. They have grown
All this has been fuelled by the urge for
accustomed to the cliché of rich Russians jetting
“strength in size”. Russia’s top companies have
around the world in the company of leggy
AUDI 2006 ANNUAL REPORT
ECONOMY: RUSSIA – THE METAMORPHOSIS OF A MARKET
blondes, their suitcases bursting with cash,
World Bank estimates that this source accounts
ready to buy up luxury apartments and the occa-
for around one-quarter of Russia’s gross domes-
sional football club. Yet the Russians are by no
tic product. In contrast to China, manufacturers
means in this business just for fun. Russian in-
of high-tech products and consumer goods
vestors have already acquired a substantial stake
make up only a small portion of the economy.
Moscow
is a modern
metropolis
undergoing
rapid change
in a German fashion company, shares in a car
The result is extreme dependence on the export-
A city of millionaires
manufacturer and even an entire chain of filling
ing of resources. Although the high price of oil
but also of a burgeoning
stations. Not all their purchases are as spectacu-
has put huge amounts of money into Russian
middle class, Moscow
lar as the acquisition of as much as seven percent
pockets in recent years, a fall in prices could
has long since become a
of the European aviation and space company
conversely have disastrous consequences for
modern, cosmopolitan
EADS by the Russian Vneshtorgbank (VTB). But
the nation’s economy. Precisely that is why the
city. The consumer boom
the fact remains: Russia is on the advance.
Russians are so keen to invest in Western com-
is reflected in the extra-
panies. Their hope is that the latter can help to
ordinary revenues of
modernise domestic industry.
Western companies in
Growth consistently above six percent
Russian economic growth has consistently been
In reality, the West is not one-sidedly dependent
above six percent in recent years, the Finance
on Russian oil and gas. Russia and Western Eu-
Minister has the enviable dilemma of what to do
rope are actually dependent on each other.
Russia’s capital city.
with his substantial budget surpluses, and exports are booming. Nevertheless, the structure
of exports in specific reveals the difference be-
Daniel Brössler has been Süddeutsche
tween Russia’s minor economic miracle and the
Zeitung’s Moscow correspondent since 2004.
major economic miracle that has taken place
He has been reporting on the transformation
in China. 63 percent of Russia’s entire export
revenue is from the sale of raw materials. The
of Central and Eastern Europe since the
beginning of the 1990s.
PHOTOS: AUDI, (FAR RIGHT): MICHAEL LUKJANOV/DREAMSTIME
Shoppers crave everything that is
international and expensive.
One of the few vestiges of Old Russia
is the Matryoshka doll.
AUDI 2006 ANNUAL REPORT
27
ECONOMY: AUDI IN THE GLOBAL MARKET
One world –
one brand
World market rewards Audi strategy
Ralph Weyler (54) has been Member of the
euros to around 35,000 euros. Audi aims
communication – in other words, in-
Board of Management of AUDI AG for
to increase its sales further by 2015 to
troducing local attributes to a global
Marketing and Sales since 2003, and has
around 1.5 million vehicles, thus rein-
idea. Typical examples include the
been working in the car industry for 23 years.
forcing its status as a global brand.
larger interior of the A6 in China, be-
The basis of the product portfolio is
cause these models are used predom-
the A4 car line, which accounts for
inantly for chauffeur-driven travel, and
Whoever aims to position a worldwide
around 45 percent of sales. By way of
the fitting of rough-road suspension in
brand successfully in this day and age
comparison, ten years ago this model
India. The experience of recent years
needs courage and stamina. That is be-
accounted for around two-thirds of to-
serves to endorse this strategy. Audi is
cause there are around 56,000 brands
tal sales. The Audi A4 will always re-
the top brand in the premium segment
in Germany alone, and on average every
main an important model, but new car
in Eastern Europe and Russia. It is like-
consumer there encounters some 3,000
lines will be added to the range, espe-
wise number one in countries such as
advertising messages from brands
cially in the higher segments.
Spain, the Netherlands, Austria, Turkey
and Argentina.
every single day. Anyone seeking to
even global scale, and not just nationally, is facing a challenge of an entirely
different magnitude, especially if the
products in question are in the premium
bracket. The example of what Audi has
achieved over the past decade never-
“The success achieved
by Audi as a global
brand is based on the
fact that the emotional
essence of the brand
is internationally understood and esteemed.”
the emotional essence of the brand
is internationally understood and esteemed, and that the substantive quality of the products can be constantly
experienced. The key element to the
success of a brand is its products. Em-
theless demonstrates that it is possible
and right to pursue a globally uniform
A premium image is established
phasis is being given not merely to
brand strategy for a premium product.
mainly “from above”, so the A6 and
their sales success in absolute terms.
The market is rewarding the strategy
even more so the A8 are responsible for
For example, although fewer of the
Audi’s positioning worldwide.
A6 are sold than of the A4, the A6 is
pursued by Audi. Vehicle sales, for
28
The success achieved by Audi as a
global brand is based on the fact that
example, more than doubled between
World brands depend on recognition
the world market leader in its particu-
1995 and 2006, from 450,000 to over
and thus uniform positioning. An
lar segment. The A8, with its 8, 10 and
905,000 units. And this volume growth
emotional product must take account
12-cylinder* versions, gave Audi a
was in no way achieved at the expense
of the requirements and specific char-
tremendous push in defining its pre-
of profitability. The average transaction
acteristics of a regional market. That is
mium positioning. The new R8* has
price has risen by almost 50 percent,
why Audi pursues the principle of
even earned Audi the reputation as
from the equivalent of less than 26,000
“glocalisation” in its brand and product
“the world’s hottest brand”.
AUDI 2006 ANNUAL REPORT
PHOTO: MARKUS HINTZEN
establish a brand on an international or
International markets
A review of Audi locations
Russia: top of the premium segment
쐽 Five years on from
the establishment of its
own sales outlets, Audi
secured the position as
top brand in the premium
segment in 2006, with
unit sales exceeding the
10,000 mark. The Audi Q7
captured a leading
The dynamism of Russia’s economic growth is
segment. Audi is ideally equipped for these
position in the luxury
also reflected in the car market. According to
challenges in an important market of the fu-
SUV segment imme-
current estimates, from 2007 sales are set to
ture, thanks to its extended model range and
diately upon launch. Audi
exceed 60,000 vehicles a year in the booming
the new R8* in particular. The network of deal-
now has 24 of its own
premium market, with imports exceeding the
ers and satellite service workshops is to be
dealers and nine satellite
threshold of one million. Both figures will then
enlarged to provide almost area-wide coverage
service workshops.
have doubled within the space of just two
by 2010, by which time it will extend all the way
years, providing evidence of an energetic con-
from St. Petersburg to well into Siberia. The
sumer climate of very high calibre. Although
establishment of the Audi Driving Experience
the growth curve as a whole will level off some-
School in 2002 and of the Audi Akademie in
what in subsequent years, it is expected to
2003 has promoted the brand’s positive devel-
continue at an above-average rate in the luxury
opment in Russia.
Dubai: key market
for luxury vehicles
South Korea: impressive sales figures
The car industry is re-
The Middle East, comprising countries such as Dubai, Saudi
garded as the driving
Arabia, Kuwait and Abu Dhabi, is a particularly lucrative
force
market for luxury vehicles. Many Western industrial com-
Korean economy. Over
panies have already established their own subsidiaries
a period of more than
there amid the economic boom that is witnessing the re-
50 years, with govern-
gion’s emergence as a major trading centre. Audi’s sales
ment support, South
strategy up until 2009 envisages considerable investment in
Korea has emerged as
brand development and marketing, and the market in the
the
premium segment is to be conquered with models such as
manufacturer
the Audi Q7.
world.
of
the
South
sixth-largest
car
in
the
Including
the
supply industry, the car
sector employs some 250,000 people. The sales figures for
the domestic market are stable, at around one million mostly
high-specification vehicles each year. The import share was
only four percent in 2006, but is expected to rise to between
six and seven percent in the next five years. The Audi A6 was
PHOTOS: AUDI
one of the most successful German import cars in 2006.
쐽 Since 2005, Audi has been supplying the Middle East with
쐽 Audi Korea has experienced dynamic growth since its establish-
premium-segment vehicles from its own subsidiary in Dubai and as
ment in October 2004. Thanks to the radical expansion of the dealer
a result has increased sales by over 50 percent within a year. The
network and a model initiative, sales have increased more than
dealer network is to be further expanded, to pave the way for sales
five-fold. The A6 has inspired this surge, accounting for 54 percent of
totalling 10,000 vehicles by 2009.
sales in 2006.
* fuel consumption figures at the end of the Annual Report
AUDI 2006 ANNUAL REPORT
29
ECONOMY: WINNING BRANDS
Quality as a recipe for success
Whether fashion, lighting, porcelain or writing implements, the success of
four German brands demonstrates their ability to hold centre stage amid international competition. The key: the high quality of their products. Text Esther Bahne
The designer label
Wunderkind GmbH & Co. KG,
Couture label and cosmetics
Potsdam
range
W
olfgang Joop is back – this
Joop. “Without stopping to reflect” he
specimen item themselves, on the busi-
time without the distinctive
simply designed a few delicate, extrava-
ness premises of Villa Rumpf, 100 metres
exclamation mark, but as
gant garments for which there were as
as the crow flies from his home. Joop
self-assured as ever. “Wunderkind” is
yet no established markets or cus-
himself chooses the materials; only the
the name the couturier has given his
tomers. “And suddenly, these clothes
most expensive will do. The garments
new label. A small player on a very big
looked like the fashion images I had
are then made up by hand, whether by
stage, of deluxe “prêt-à-porter” calibre.
been dreaming of.” Wolfgang Joop likes
men in India or by nuns in Magdeburg.
The name is like its collection: quintes-
to sit in the kitchen, right at the heart
“By having my garments produced in
sentially German but, like “kindergarten”
of Villa Rumpf, while taking a few mo-
this way, I make them painstaking to
and “zeitgeist”, universally recognised.
ments to tell the story. In summer 2002,
copy and therefore preserve their aura
The Italian press calls him “Wunder
he presented his test collection to fif-
of luxury,” explains Joop. For instance,
Wolfgang”. And the moment his elfin de-
teen carefully chosen buyers in the high
only fifteen of the silk jacket with silk
signs made their debut on the catwalks
rooms of the impressive Potsdam brick
lining that was seven days’ work for the
of Paris, the international fashion world
building. His return to the fashion busi-
seamstress will be made. This couture
found these handmade silk clothes
ness transpired to be a resounding suc-
character comes at a price: you will not
from Potsdam simply “wunderbar”.
cess that took him to fashion shows in
find a Wunderkind evening gown priced
“A handful of people”, an empty villa
New York and Paris. Today Wunderkind
at less than 5,000 euros.
and the idea of getting a new fashion
can be found in Tokyo and Moscow, the
show off the ground. That was how Ger-
brand’s showroom is in Milan and the
many’s most exclusive fashion label
new flagship store is in Berlin. As well as
came into being. “It was only really
fashion, Wunderkind sells cosmetics
meant as a little experiment. I wasn’t
there – hitherto a secret tip.
planning to create a new company that
Wolfgang Joop and his team of 35 em-
would then carry on operating,” assures
ployees produce every Wunderkind
30
AUDI 2006 ANNUAL REPORT
Wolfgang Joop has
rediscovered his
inner “Wunderkind”,
with which he is
enjoying eminent
success.
PHOTOS: WUNDERKIND
Established: 1999
The lighting factory
bH, Lüdenscheid
ERCO Leuchten Gm
hting as the fourth
“lig
ls
The company sel
re” all over the world
ctu
dimension of archite
lion
e, 2005: EUR 140 mil
Consolidated revenu
00
e: over 1,0
Emplo yees worldwid
Year founded: 1934
I
German
employees of the German lighting man-
physical hardware to the service he was
Reichstag, lit up the interior of the
ufacturer ERCO are now in action at
able to provide. Today, ERCO offers cus-
Hong Kong and Shanghai Bank and
some of the most prestigious construc-
tom lighting systems that can be con-
helped Paris acquire a new landmark
tion sites in the world. The company,
trolled variably via highly complex soft-
at night. ERCO, “the lighting factory”,
established in 1934 in Lüdenscheid, has
ware as part of a network – and are used
highlights
buildings
operations worldwide through more
in museums, airports, hotels, shopping
throughout the entire world – in colla-
than 60 subsidiaries, branches and
centres, government buildings and
boration with the best architects and
agencies. Sales employees in all major
places of worship all over the world.
lighting planners of our age.
cities nurture contacts with the main
t
illuminated
the
sophisticated
the
firms of architects. They see themselves
Sauerland experienced one of those
above all as consultants: they assist the
“big bang” moments. It had of course
architect and chief lighting planner with
long been active in neighbouring Euro-
the concept, and discuss requirements
pean countries. But when ERCO won the
and options. Ideally they will be able
contract to illuminate the head offices
to support a project from the very
of the Hong Kong and Shanghai Bank in
first draft, throughout the construction
1983, the company found itself facing
phase, and right up to subsequent con-
an entirely new type of challenge. One
versions and renovations. Their area of
of the first questions was: should the
expertise is light, “the fourth dimension
company buy a fax machine to help with
of architecture”.
The
family-owned
firm
from
coordinating the project? “My father
“We are selling a medium that makes
finally agreed to the investment,” re-
things visible but is not itself visible.
calls third-generation ERCO director
Our clients want to use light in order to
Tim Henrik Maack with a wry smile. “But
see, project something, work more ef-
he was convinced we would no longer
fectively or relax. They consequently
find any use for it once the project was
present us with tasks for which we have
finished.”
to find a solution,” explains Maack.
architectural
“Light, not luminaires” was the com-
lighting, the 1,000-employee company
pany philosophy formulated by his fa-
has chosen a niche in which expanding
ther as long ago as the 1960s. He trans-
means going global. Meier’s Ara Pacis
formed a manufacturer of kitchen lamps
in Rome, Gehry’s Guggenheim Museum
into an expert partner for the profes-
in Bilbao, Foster’s City Hall in London –
sionals by turning the focus from the
In
PHOTOS: ERCO
has
concentrating
on
Glowing examples:
London’s City Hall (top)
and the Berlin Reichstag,
home of the German
parliament, are illuminated
by ERCO lighting.
AUDI 2006 ANNUAL REPORT
31
ialists
The tableware spec nconia
Selb, Upper Fra
BHS tabletop Group,
celain
for professional por
World market leader
R 92.1 million
Annual revenue: EU
e: 1,257
wid
Emplo yees world
Year founded: 1998
and cups,” says Hans G. Beckmann. “We
plates every day. Its porcelain is
sell solutions to a problem.”
with unique, handcrafted goods, they
are well equipped to meet the complex
used in Caesar’s Palace in Las
The age of white gold seemed over
requirements of professionals. Top inter-
Vegas, in the Westin Kuala Lumpur and
when this manager reputed for turning
national hotels and restaurants, airlines
in Brenner’s Park Hotel. At a time of
round ailing businesses arrived in Up-
and shipping lines today order their
dwindling private sales, BHS tabletop
per Franconia. For all its rich tradition,
chinaware from Bauscher, Hutschen-
AG has succeeded in supplying porce-
the German porcelain industry was be-
reuther Hotel and Schönwald (BHS). As
lain for the professionals, and is now
ing squeezed out of the market in 1993:
do canteens and hospitals. As Beck-
world market leader in its domain.
demand for best dinner services for do-
mann knows, all of these customers are
Nevertheless, the CEO sees himself as
mestic use was falling; cheap imitations
looking for much more than just plates
more than a mere purveyor of china-
were flooding the market. After two
and cups. “We see establishments like
ware. “What we sell is not really plates
years of modest success with the exist-
the Burj Al Arab in Dubai and the Tantris
ing structure, the new CEO of the former
in Munich as cultural platforms,” states
Hutschenreuther AG opted for radical
Beckmann. They define trends in many
change. Beckmann sold off domestic
areas, porcelain included. The BHS ap-
business, the pride and joy of the com-
proach involves allowing the interior de-
pany, and disposed of the biggest
signer, the manager or the manager’s
source of earnings, the clay pits. He
wife – or whoever else makes the deci-
then persuaded the company’s three
sions – to help design the tableware
brands to focus on a long-established
using the company’s own software. The
area that was previously no more than a
result: small-scale designs that are
market niche: the production of china-
guaranteed to be unique. For other
ware for the deluxe hotel and catering
customers, the company focuses on
trade. “We had the chutzpah to do
functionality and maximum flexibility of
something that nobody associated us
supply. “Lufthansa needs our chinaware
with, but that we were eminently quali-
to be unbreakable and space-efficient.
fied to do.”
For canteens, we develop plates with
Meals are served on BHS
porcelain everywhere
from the exclusive Tantris
restaurant (top) to high
above the clouds.
32
AUDI 2006 ANNUAL REPORT
The three brands that Beckman com-
built-in microchips that facilitate pay-
bined into BHS tabletop AG have a total
ing. We can dispatch replacement items
of 350 years’ experience in manufactur-
required by the AIDA cruise liner to any
ing porcelain. As producers using top-
port. And if the Bayerischer Hof hotel
quality materials who have always sought
needs 5,000 plates with its own logo in
to unite profitable volume production
two days’ time, it will get them.”
PHOTOS: LUFTHANSA, TANTRIS
2
00 million people eat from its
ECONOMY: WINNING BRANDS
The point-maker
Faber-Castell AG
s
, Stein, ne ar Nurem
berg
high-quality produ
cts for
writing, drawing
and creative desig
n
Consolidated rev
enue, FY 05/06: EU
R 354.1 million
Emplo yees world
wide: 6,500
Established: 176
1
Manufacturers of
A
German premium brands
conquering world markets
s the world’s biggest manufacturer of wooden pencils, he is
standing his ground amid the
Professor Bernd Venohr,
computer age’s trend towards digitisa-
Berlin School of Economics,
tion. His core product, the pencil, has
is an expert on business
been manufactured for 245 years and
strategy.
was voted Product of the Year in 2000.
He regards internationalisation as the
most natural thing in the world, yet his
German industry is very good at exporting:
Bavarian products still proudly sport a
Germany earned the title of the world’s top
motif from mediaeval Germany even
when sold in the Far East – two battling
knights with lances. Count Anton Wolfgang von Faber-Castell stands by the
exporting nation for the third year in succesConsidered to be one of the
most important innovators
in Germany: Count Anton
Wolfgang von Faber-Castell.
PHOTOS: FABER-CASTELL
power of tradition – yet is considered to
sion in 2006. In addition to the well-known
major corporations, this success stems
in no small measure from some 1,150 midcorporates, most of them in family owner-
be one of the most important innova-
suggestive power of his heritage still
ship, that are the leaders on the world mar-
tors in Germany.
has the capacity to open doors world-
ket. They are remarkable not only for their
The count is in good company in his
wide. In the 1990s he reintroduced the
large number, but also for their sheer diver-
choice of favourite writing implement.
brand motif of the knights that had once
sity. Medium-sized German companies are
Advocates of his pencils include artists
been sacrificed to the spirit of the age,
very successful all over the world both in the
from the 18th to the 21st centuries, liter-
incorporated the company’s founding
obvious areas such as mechanical engineer-
ary figures such as Goethe, Nabokov,
year into the logo and has portrait pho-
ing and automotive parts, but also in the field
Böll and Grass, artists such as van Gogh,
tos taken preferably in front of the family
of consumer goods and durables: around
and designers of the calibre of Karl
castle. For the eighth-generation owner,
200 of these companies have succeeded in
Lagerfeld. The Faber-Castell pencil is
there is no hint of conflict between the
allying German engineering expertise to
still much in demand as the oldest
dictates of tradition and innovation.
outstanding design and marketing. The re-
branded writing implement in the
Exemplary social standards and an in-
sult: high-quality, innovative brand products
world: in a new guise, it was voted
volvement in social and environmental
that reflect the tastes of highly discerning
”Product of the Year” in 2000. The manu-
issues are a personal concern of the
customers all over the world. The four en-
facturer gave its triangular pencil the
count. Again something that runs in the
couraging examples portrayed demonstrate
name Grip 2001, its non-slip pimples
family. “The best thing about a family
what medium-sized businesses can achieve
making it particularly ergonomic.
firm is the values for which it stands,” de-
on world markets if they take the huge op-
clares von Faber-Castell, smiling.
portunities of globalisation to heart.
The count recognised early on that the
AUDI 2006 ANNUAL REPORT
33
ECONOMY: THE CUSTOMISED PRODUCT
Pure
passion
Swift, unconventional and successful:
by concentrating on the essentials, the Monegasque
yacht builder Wally is revolutionising boatbuilding.
Text Peter Hannemann
Choice designer furniture
and natural materials
dictate the character of
the “Wally B” below deck.
I
t is permeated with the scent of the big, wide
Wally yachts are for the purist: clear and neat in
world. And more: everything that is beautiful
appearance, possibly even aesthetically ex-
and desirable under the Italian sun comes to
treme, and featuring only choice materials. All
life when Luca Bassani takes you on board one of
packed into an iconic boat design – eerily per-
his fabulous vessels. You could probably describe
fect, from bow to stern and from mast to rigging.
PHOTOS: WALLY
him as incorrigibly obsessed with lifestyle and de-
Perfect workplace for
sailors: no superfluous
superstructures impede the crew on deck.
sign, because for all the cult status that his yacht
Eschewing all superfluity
brand Wally now enjoys, Bassani himself has not
Bassani eschews everything superfluous, uses
adopted the airs and graces of a star. Even
graphite for the hull, kevlar for the sails and
though his preferred clientele are tycoons and
titanium for the rudder. The interiors are stylisti-
billionaires who often surround themselves with
cally very reminiscent of modern classics. When-
the creations of the elite. It is simply that Bassani
ever such Wally yachts pull into the marinas
knows how to arouse the passions of the elite.
of Saint-Tropez, Porto Cervo or Portals Nous,
Whenever the Wally boss unveils another new
other boat owners surreptitiously reach for their
yacht for the rich and super-rich, it rapidly be-
binoculars and fall respectfully silent, knowing
comes clear that even the most pampered of
only too well that Wally boats are currently the
customers will still register the addictive pull of a
measure of all things in the sailing world. Merely
new plaything. All other yachts will suddenly
the way the metal of a hydroplane shimmers
look so “last year”, and affluent clientele will sim-
according to the light conditions as it cuts
ply swoon for the new version.
through the waves with its slender hull
AUDI 2006 ANNUAL REPORT
>>
35
ECONOMY: THE CUSTOMISED PRODUCT
Systematic functionality
is also the priority in the
design of the cockpit.
Relaxing in a racing
atmosphere: the stern
of the motor yacht
“118 WallyPower”.
36
and minimalist grace is a feast for the eyes of
Bassani has agreed on the layout with the client,
every design aesthete.
the Wally boss, who drives an Audi, chooses the
To find out about Luca Bassani the man, you
yard and supervises the building of the boat. The
need to look at his boats. A devotee of risk sports
result is then usually yet another design icon of
on the periphery of the yachting universe, and
the calibre that has earned Wally the reputation
heir to an Italian business empire in kitchen ap-
as the most spectacular yacht-builder since its
pliances, he fell in love with sailing at an early
establishment in 1993. Because the brand is as
age. But he was always filled with a sense of hav-
far flung from conventional yacht design as the
ing to provide a new point of focus for the yacht-
Audi TT original was from its competitors.
ing world. This, the key to the success of Wally,
AUDI 2006 ANNUAL REPORT
ultimately also led to a new
Cultural revolution: 118 WallyPower
business idea. Bassani needs
Once some two dozen of these superlative sail-
neither his own yard nor his
ing boats and floating designer yachts had given
own design studio to run his
their owners the freedom of the waves, Luca
business. He works hand in
Bassani believed the time had come to kick off a
hand with the best engineers,
new cultural revolution in the race for status at
designers and interior spe-
exclusive harbour resorts. In creating the high-
cialists from the company’s
speed motor yacht 118 WallyPower, he has not
headquarters in Monte Carlo.
only switched discipline but also probed the very
And thanks to internation-
limits of what is possible – in both technical and
al
visual terms. This superlative vessel is the instru-
star
designers,
below
deck Wally yachts are more
ment of his creativity. An overdose of emotions.
reminiscent of purist salons
Its extrovert design has already earned the
with designer furniture than
WallyPower a reputation as the stealth bomber
of conventional cabins. Once
of the seas.
High-tech dining area in
the “118 WallyPower”:
carbon fibre Foster table
and Vitra chairs.
Wally yachts are easy
to control even in
challenging conditions.
The “118 WallyPower”
ranks as the fastest
motor yacht in the world.
This 36 metre long stealth boat has drive
club of owners of this seagoing bullet will have
turbines worthy of a jet plane. Three of them, to-
to pay Luca Bassani 18 million euros. To put that
gether mustering 16,800 horsepower, propel it at
in perspective, the same money could buy about
a speed of more than 60 knots. The equivalent of
80 Lamborghini models. Wally has thus defini-
110 km/h on the water feels like about 300 km/h
tively become the prestige address among boat-
on a road. This is another world to relaxed cruis-
builders, even for people who already have
ing, and more like riding on the edge of a razor
everything. Innovative design, embodied by a
blade when the 118 WallyPower crashes through
boat structure that is both stylish and puristic,
the hissing waves. The dominant materials on
makes a very special statement. This is the state
board this powerboat, with its iridescent grey-
of the art in contemporary yacht-building, Luca
olive military colour scheme, are wood and dark-
Bassani-style.
Elegant and luxurious:
Wally yachts are
extensively equipped
below deck, too.
tinted glass that surround the rhombic bridge.
When cruising at a casual speed, the dining table
with sun sail can be extended at the push of a
PHOTOS: WALLY
button. Below deck there is the master bedroom,
as well as bathrooms and cabins for four guests
Peter Hannemann was a writer at Die Welt
and six crew members. But the focal point is a
for 25 years and at Handelsblatt for six years.
high-tech kitchen made from superlative stain-
Today he is a freelance author, writing for
less steel, with a Foster dining table and chairs
by Vitra. Those wishing to join the very exclusive
the Frankfurter Allgemeine Zeitung amongst
other publications.
AUDI 2006 ANNUAL REPORT
37
ECONOMY: THE CUSTOMISED PRODUCT
Choice materials, meticulously finished, introduce
a special flair both tangibly and visually.
Stylish allure
quattro GmbH is fulfilling the individual wishes of modern car buyers
The modern-day car buyer is increasingly looking for individ-
Audi exclusive enables people to customise their Audi in line
uality, exclusivity and sports appeal. With an attractive
with their personal preferences. Customers can choose from
range of high-performance vehicles, exclusive customisa-
twelve different leather colours, available in the two leather
tion options, dynamic sports packages and lifestyle articles
grades Valcona and Fine Nappa, plus Alcantara in nine
typical of the brand, quattro GmbH has set itself the goal of
colour versions. The stitching is available in a free choice of
meeting ideally every customer requirement. And the sur-
colours. To match the leather, the inlays on the instrument
prising thing is that virtually everything is indeed possible.
panel, centre console and doors can be given an individual
Nor is it necessarily a complicated business. The customer
touch with fine woods. Every wood element is sanded by
need merely visit their nearest Audi dealer.
hand, then stained, varnished and polished – a process
almost as intricate as crafting a violin. For the bodywork,
customers can obtain special paint finishes in virtually any
quattro GmbH spans four business areas:
colour of their choice, provided the paint can be formulated
Audi RS models supply technically and aesthetically
on a water-soluble basis to ensure that it is environmentally
uncompromising high-performance vehicles with built-
compatible. Distinctive alloy wheels and special items of
in sportiness, developed for customers who want a high-
office equipment can in addition be ordered.
performance sports car without having to forgo everyday
Audi lifestyle articles supply an extensive range of goods
suitability, commensurate comfort and convenience, and
for individualists. After all, many car customers expect
top quality standards. The new flagship sports car, the
more than “just” a car from their favourite brand. Lifestyle
Audi R8, is likewise manufactured by quattro GmbH.
articles from quattro GmbH enable them to express their
The S line sports packages respond to demand for extra
affinity for Audi in ways other than through the comprehen-
sports appeal. They are tailored specifically to the individual
sive range of Audi models, and benefit from the expertise
Audi model and are clearly distinguished from the standard
of the brand with the four rings in many other product
equipment lines by their particularly sporty features.
areas too.
PHOTOS: QUATTRO GMBH
The range of products and services available from
38
AUDI 2006 ANNUAL REPORT
ECONOMY: IN BRIEF
Audi Lab of
Market Research
Audi Forum
opens in New York
Identifying even more accurately what customers
want and thus being in
an even better position to
fulfil these wishes is
the purpose of the newly
established “Audi Lab of
Market Research”. In
partnership with the University of St. Gallen, the
Ingolstadt carmaker is
thus creating a leading
centre of research that
focuses on integrating
customer requirements
even more deeply into the
development and marketing processes for cars.
The Swiss-based market
research lab is headed by
Prof. Andreas Herrmann.
Mayor Michael R. Bloomberg (left) and
Audi Board Member for Marketing and
Sales Ralph Weyler.
The opening of the Audi brand’s new showcase
was marked by an Audi cavalcade down Park
Avenue, which had been cordoned off for the
Clean diesel
partnership in
the USA
in brief:
occasion. Thousands of onlookers witnessed the
economy
mid-engine sports car, leading the cavalcade
first appearance in the USA of the new Audi R8*
with
none
other
than
Mayor
Michael
R.
Bloomberg behind the wheel as it pulled up at the
Forum. The New York City Audi Forum is located
To boost the popularity
right at the heart of Manhattan, on the corner of
of the diesel engine in
Park Avenue and 47th Street.
the USA, Audi is joining
forces with Volkswagen
and DaimlerChrysler to
promote clean diesel under the name of Bluetec®.
PHOTOS: AUDI
The three car manufacturers agreed on this highly
Five millionth Audi A6
promising campaign in
One year after start of produc-
November 2006. The aim
tion of the new Audi A6 Avant,
is to demonstrate the
AUDI AG celebrated an impor-
advantages of modern
tant production landmark for
diesel technology to
this model in mid-January
consumers in the USA.
2006: the five millionth A6, an
The Audi diesel models
Avant in Silver, metallic with a
will satisfy the toughest
2.7 TDI engine* with 132 kW
US emission standards
(180 bhp) left the Neckarsulm
upon their market launch
production line. This is the lat-
in 2008 and can thus be
est milestone in the success
sold in all US states. The
story of the modern premium-
model will
class Audi A6, which began 37
be the Audi Q7 3.0 TDI*.
years ago with the first Audi 100.
first
Bluetec®
* fuel consumption figures at the end of the Annual Report
The success story of the
A6 began 37 years ago.
AUDI 2006 ANNUAL REPORT
39
TECHNOLOGY: AUDI R8 PRODUCTION
High-tech and handcrafted:
The Audi R8 production shop
28 million euros have been invested in this prestige project
at Neckarsulm. A sign of Audi’s commitment to Germany’s
manufacturing future. More experienced workers are preferred,
particularly for vehicle assembly. Text Eric Felber
Hands-on work in the R8 body manufacture:
the finishing of the outer skin’s surface is the
final production stage in the body shop.
U
pon touring this vehicle pro-
cycle. Gaspare Buono has been working
duction shop, the last word
on the Audi production lines for 27 years,
that would occur to you to de-
but he too finds this an utterly new expe-
scribe it is “hectic”. The atmosphere in
rience: “Everything here is much calmer.
this low factory building is evoked much
But at the same time you need to know a
more aptly with words such as “in-
lot more in order to keep up with the
formal”, “elegant” and “ultramodern”.
processes going on here.” Johannes
Daylight floods into the halls, and the
Kind, mechatronics specialist, describes
colours white and silver are dominant.
it as “a simply fantastic place to work.”
To emphasise the contrast, the few
And Hakan Solmaz, group spokes-
robots are jet black. The workers, clad
person, declares credibly: “It’s an honour
in red overalls, come across as highly
for me to be building this car. I get goose-
focused yet relaxed. They are all proud
pimples every time I look at the R8.”
to be working in a place like this. Be-
Part of this “tingle factor” are the 99
cause this place, having the air of a
metres of weld seams, 782 punch rivets,
sanctuary amid an environment of
308 self-tapping screws and 113 weld
industrial-scale automotive production,
studs that go into every finished R8 body.
is where one of the most spectacular
More than 5,000 different parts are
products in the car sector takes shape:
supplied for the Audi R8 by manufactur-
the Audi R8*, the first Audi super sports
ers all over the world. After passing
car with a 309 kW (420 bhp) V8 FSI mid-
through a grand total of 39 stations – 17
engine.
in the body shop and 22 in assembly
For all concerned, being part of this
and final inspection – a new R8 is then
project is something truly special. The
ready for shipping to the customer. A
R8 production shop is special in very
total of around 250 workers are involved
many respects: the car manufacturer
in the process. Another unusual statistic
has invested 28 million euros into the
is that more than one-third of those
craft-scale production shop at the
working in assembly are highly quali-
Neckarsulm plant. The sports car has
fied, experienced skilled workers with
been built here on a two-shift basis, un-
an average age of over 40.
der the supervision of quattro GmbH,
since autumn 2006.
The rhythm of working life here is dif-
The two halls are modest in size, and
bear no comparison with giant industrial
plants. High-tech on a craft-shop scale.
ferent: whereas there are just one and a
In future, visitors will moreover be able
half minutes earmarked for each work-
to have a look around. A new route will
ing cycle on an Audi A6, the R8 has been
take visitors on factory tours through
allocated a luxurious 44 minutes per
the R8 production shop.
>>
* fuel consumption figures
at the end of the Annual Report
AUDI 2006 ANNUAL REPORT
41
TECHNOLOGY: AUDI R8 PRODUCTION
Body shop
52 connecting points for the running
This is how the Audi R8* takes shape as
gear and steering are machined in the
a top-quality product: the super sports
milling centre, and holes and threads
car is steered through production ac-
formed in the body. Because the R8
cording to the “string-of-pearls” princi-
features suspension with motor-racing
ple. The string-of-pearls idea means
traits, maximum precision in the con-
that a fixed assembly sequence in which
necting points is absolutely imperative.
all the scheduling criteria of the various
The bodies, now finished apart from
production areas are incorporated is laid
the add-on parts, are then measured in
down even before body manufacturing
a contactless laser process. 90 laser
has started.
measuring heads scan about 185 meas-
In the production process itself, the
uring points on each body in less than
sequence determined before the start
five seconds. This so-called inline meas-
of body manufacturing is then adhered
uring technology provides an indication
to precisely. The aim is sequence fidelity
of the quality and dimensional accuracy
of at least 96 percent.
of each body. The measuring points can
The Audi R8 has passed through 17
be represented three-dimensionally and
stations in the body shop in Hall B14
evaluated. These ongoing dimensional
by the time it reaches final assembly.
accuracy checks mean that any adjust-
99.9 percent of the body is made from
ments needed to the fixtures and com-
aluminium, with just a few parts made
ponents can be made straight away.
from plastic. Here again, the many years
All add-on parts such as the front lid
of experience and expertise of the
and doors are precision-fitted to the
Neckarsulm body shop in the domain of
body in the framing station. The gap
aluminium bodies is exploited.
“The inline measuring
technology provides
an indication of the
quality and dimensional
accuracy of each body.
The measuring points
are represented
three-dimensionally
and evaluated.”
and functional dimensions are adjusted
Personnel are only admitted to the
The R8 body tips the scales at just 240
individually to the target value for every
paint shop via prescribed routes, and all
kilograms, and complete with all add-on
vehicle. This guarantees that the add-on
must wear protective clothes. They for
parts such as doors and lids the alu-
parts function well and have excellent
instance have to pass through air locks
minium shell weighs 270 kilograms.
build quality.
on their way to the top-coat painting
The cycle time in the body shop is
The body manufacturing process is
44 minutes. This means that the produc-
completed by finishing the outer skin’s
tion capacity, on a two-shift basis, is
surface over the entire body.
booths.
As well as giving the R8 body its individual appearance, the paintwork meets
20 cars a day. The level of automation
Once the vehicle identification num-
a whole range of other requirements. Its
of just 25 percent underlines the char-
ber has been stamped on, the R8 body
properties include resistance to chemi-
acter of a bespoke article. 38 welding
can be forwarded to the paint shop.
cals, long-term stability, resistance to
machines, five sets of riveting tongs,
PHOTOS: AUDI
The cycle time in assembly is approximately
44 minutes.
scratching and impact from flying
five robots, 37 hand-held devices and 13
Paint shop
stones, imperviousness and corrosion
welding stations are used in the produc-
This is where the sports car’s body is
resistance. One paint coating alone
tion of the Audi R8. Around 70 workers
painted, on the same production line
would be unable to meet all these re-
operate these facilities, which occupy a
as the Audi A8 and the Lamborghini
quirements. The desired result is ob-
floor space of 3,570 square metres.
Gallardo. Buyers of the R8 can choose
tained through the combination of dif-
At the start of the body manufacturing
from eight basic colours: Jet Blue
ferent, coordinated coating processes.
process, the three sub-assemblies – for-
(which is exclusive to the R8), Phantom
ward structure, central floor and rear-
Black, Ice Silver, Monterrey Green, Day-
Employees
ward structure – are welded together
tona Grey, Brilliant Red, Ibis White and
The craft-scale assembly of the R8 de-
by hand in various fixtures. These sub-
Mugello Blue. In order to obtain a su-
mands very high qualifications and
assemblies form the substructure of
perlative paint finish for these colours,
considerable experience from the 100
the R8.
the paint must be applied in immacu-
or so workers. Many employees who
lately clean conditions. The entire paint
were involved in Technical Develop-
shop has consequently been divided up
ment and Prototype Construction were
into four clean-room zones. A slightly
thus retained for series production of
higher air pressure is maintained inside
the Audi R8.
Top left, opposite: the three sub-assemblies
for the body are welded together by hand.
Bottom left, opposite: the Audi R8 is
assembled in 14 work cycles.
the building compared with its sur-
In launching the pilot project “Audi
roundings, to prevent particles of dirt
Silver Line”, Audi is also responding to
from finding their way into the paint
demographic change by focusing on
shop.
and specifically seeking to utilise
* fuel consumption figures at the end of the Annual Report
AUDI 2006 ANNUAL REPORT
>>
43
TECHNOLOGY: AUDI R8 PRODUCTION
Futuristic look with the tailgate opened.
baskets are prepared by assembly
test”. This involves driving the cars
workers operating as a team.
both on the internal test track and in
The parts required for fitting to pre-
ordinary traffic. The duration of the road
cisely one vehicle are collected in a
test is about two hours on both tests
component basket in the “supermarket
combined. At the factory, the vehicles
zone” or directly at the assembly line.
are driven over the “shake stretch” and
The worker on the assembly line takes
through a banked curve, as well as put
the materials for the vehicle on which
through a brake test. The test drives
he is working from the component bas-
include inspections of the engine com-
ket. In other words, he does not need to
partment and checks of various func-
leave the “worker zone” to collect each
tions (lights, air conditioning, naviga-
part, and the materials needed for each
tion system, radio, mirrors, etc.).
assembly step are in the immediate
“In launching the pilot
project ‘Audi Silver Line’,
Audi is responding to
demographic change
by focusing on and
specifically seeking to
utilise the strengths
of “older” employees
for R8 production.”
vicinity of the car and ergonomically
Final approval
within the worker’s reach.
After the road test, the vehicle arrives at
The component baskets are fitted with
the finishing hall for its final approval
inlays to prevent painted parts in par-
at check point 8 (ZP8), in other words
ticular from being damaged. The inlays
for the final vehicle inspections. The fin-
mean that every component has a de-
ishing is done together with quattro
fined location and the optimum order of
GmbH’s RS models. Before being driven
fitting is specified automatically. This
into the hall, every vehicle is washed
order is visualised by the numbering of
and prepared in a drip zone for the
the components displayed on the bas-
“sprinkle test” to check for watertight-
ket. This serves as an exact overview for
ness. The R8 is now sprayed with
the strengths of “older” employees for
the worker as to which parts have al-
around 1,200 litres of water for the dura-
R8 production. Dr. Werner Widuckel,
ready been installed. In other words,
tion of six minutes, dried and checked
AUDI AG Board of Management Mem-
the assembly process for each cycle is
for water penetration.
ber for Human Resources, explains:
complete when the basket is empty.
There then follow the interior check,
“This new model seeks to make the
This reduces personnel traffic and ren-
the paint/surface finish check in the
best possible use of valuable voca-
ders the process more reliable.
light tunnel, various functional checks
tional experience.” But he is at pains to
The materials are delivered to the as-
and electrical checks (control units).
add: “The work involved is by no
sembly line and the supermarket zones
Once the vehicle has been cleaned and
means an ‘easy option’. If anything, the
by floor conveyor vehicles. These vehi-
the checks completed, the R8 receives
low number of production sequences
cles transport the materials to the point
its official final approval. Before leaving
means a greater range of work is in-
at which they are required on trailers
the finishing hall, the headlights are
volved in each cycle. The high complex-
that are joined together like rail cars.
adjusted and the transit packaging is
ity of a vehicle such as the Audi R8*
No fork-lift trucks are in use in the R8
fitted. The sports cars are then loaded
means very experienced workers are
assembly.
for shipping to the customer.
needed. At the same time, the longer
The supermarket zones have the same
Board Member for Production Dreves
working cycles reduce the physical
structure as the individual component
concludes: “It takes incredible expertise
burden on the workers.”
baskets, so each of the zones in which
and just as much passion and emotion
the baskets are filled contains only the
to build a car of the calibre of the
Assembly
materials for one particular basket.
Audi R8. And our employees are not
The R8 assembly line occupies an area
Every standard or small part and every
lacking in any of these qualities. Every-
of 5,370 square metres. It comprises 14
tool has a defined place on the assem-
one is immensely enthusiastic about
assembly cycles and eight preassembly
bly trolley. All tools are in addition
this car. As our customers will be, of that
areas located in the immediate vicinity
colour-coded and therefore assigned to
there can be no doubt.”
of the fitting cycles. The hall also hous-
a specific cycle. This ensures that the
es commissioning, the track test bench
“wrong” tool is not used.
gine, suspension, radiator, windows,
Road test
control units, rear lid, cockpit and doors
Once the R8 has passed check point 7
are preassembled.
(ZP7), where the car’s test chart is
90 percent of the materials in assem-
scanned and the underbody and engine
bly are brought to the assembly stages
compartment are checked, the road-
in component baskets. The component
ready sports car now goes for a “road
44
AUDI 2006 ANNUAL REPORT
Top right, opposite: despite the use of robots,
the level of automation in the R8 manufacturing process lies at just 25 percent.
Bottom right, opposite: only after it has
received a thorough final check in the light
tunnel does a car leave the assembly line.
* fuel consumption figures at the end of the Annual Report
PHOTOS: AUDI
and the roller dynamometer. The en-
TECHNOLOGY: OPTIMISED PRODUCTION
Prof. Dr. Jochem Heizmann:
“We feel very much at
home here in Germany.”
“The key to securing
jobs in Germany
is having new,
competitive products.”
flexibility, logistics and procurement
all need to be scrutinised, too. And we
believe there is still ample potential for
improvements in those respects.”
In the case of the R8, Audi manufactures body parts at the toolmaking
shop in Gyó´r, Hungary, where the facilities can be used very economically
for manual small-scale production be-
Keeping Germany
productive
R8 production an object lesson
cause of the low labour costs there.
The production planners for the R8
started doing their job very early on.
“Our planning team also supervised
the production preparations for the
Lamborghini Gallardo Coupé* in Sant’
Agata. This experience meant that we
Building cars competitively in Ger-
is emphasised by our choice of produc-
knew what potential there was for
many is not a question of scale, nor of
tion bases for our new models – the
improvements, and were then able to
trickery. Any doubters should look to
Audi A5, the small SUV Audi Q5 (both
realise it very early on for the R8. The
the Audi Neckarsulm plant for an ob-
Ingolstadt) and then, of course, the
important thing was being able to
ject lesson in how to do things. There,
Audi R8. We feel very much at home
intervene as early as the concept
the brand with the four rings has set up
here.”
phase. Once the design has been
a small-scale production shop for its
Heizmann does, however, make one
approved, it is much more difficult to
super sports car, the Audi R8*. It is the
thing perfectly clear: “Our decision in
make changes.” Compared with the
result of lean processes and produc-
Germany’s favour in each of these
Lamborghini Gallardo, the production
tion-driven product design, of which
three cases was not just about sheer
time of the R8 was virtually halved.
Prof. Dr. Jochem Heizmann, Board Mem-
patriotism; we have chosen to build
The R8 production approach also
ber for Production of the Volkswagen
them here because it also makes eco-
observed the dictates of ‘lean produc-
Group and Board Member for Produc-
nomic sense. Economic, because we
tion’. The Neckarsulm production halls
tion at AUDI AG until January 31, 2007,
have workers who are very well quali-
reflect many features taken from the
says: “The fact that we are building
fied and highly motivated. And the
methods and ideas toolkit of lean pro-
the new Audi R8 in Neckarsulm is a
infrastructure is excellent. The key to
duction: waste avoidance, optimum
ringing endorsement of our belief in
securing jobs in Germany is having
ergonomic conditions, short routes,
Germany’s manufacturing future. It is
new, competitive products. Audi is in
and guided working processes.
an example of how to create a compet-
such a good position because our
itive small-scale production line of the
products are highly sought after.”
locations depends most crucially on
shorter the production time, the lower
whether we keep improving our prod-
the widespread belief that producers
the labour costs factor. And he adds:
ucts and processes systematically. In
will gradually have to turn their backs
“We shouldn’t keep hammering on
developing our new vehicles we have
on Germany due to the rising pressure
about the level of labour costs in Ger-
to be even more systematic in ensur-
of costs. Heizmann continues: “We
many. Wages obviously have to be
ing they meet the exacting require-
definitely do not share that opinion.
realistic, but they are only part of a big-
ments of our customers, while keeping
The fact that Audi won’t be pulling out
ger picture. Efficiency, productivity,
them efficient to produce.”
AUDI 2006 ANNUAL REPORT
* fuel consumption figures at the end of the Annual Report
PHOTO: CLAUDIA KEMPF
His equation is relatively simple: the
The production expert thus refutes
highest technological calibre.”
46
Heizmann concludes: “The longterm success of German production
TECHNOLOGY: LED HEADLIGHTS
Cars seen
in a new light
Light-emitting diodes are the light source of the future.
Audi has already developed a headlight that operates entirely
with these tiny light sources. Text Fred Wagner // Photos Jens Neumann
By a model of a lightemitting diode (LED):
designer Andreu
Sola Gomfaus (left)
and technical expert
Dr. Wolfgang Huhn.
W
henever engineers and designers at
because they operate in an entirely different way
Audi ponder the possibilities for the
to conventional light bulbs. LEDs light up with
car headlight of the future, the good
the aid of semiconductors on an electronic chip.
old light bulb does not even enter into the equa-
When an electrical voltage is applied to these
tion. The developers have discovered a new light
semiconductor layers, the electrons leap to a
source for the car: light-emitting diodes, or LEDs
higher energy level. They then emit light as they
for short. These tiny semiconductor compo-
revert to their original level.
nents, measuring but one square millimetre, are
very efficient at converting electricity into light
Thanks to their special operating principle,
LEDs are almost entirely free from wear and
AUDI 2006 ANNUAL REPORT
>>
47
TECHNOLOGY: LED HEADLIGHTS
generally last the entire lifetime of a car. They
daytime running lights are eye-catching, and
are more resistant to shaking and do not have
incorporated distinctively along the lower edge
a hollow structure that could implode. LEDs
of the headlights. The turn signals comprising
also produce more intense light, use less elec-
eight yellow light-emitting diodes run along
tricity and respond as much as ten times faster
the inner edge of the headlights and, together
than a classic light bulb, because semiconduc-
with the 24 light-emitting diodes of the daytime
tors operate virtually inertia-free. White high-
running lights, form a frame for the futuristic-
performance light-emitting diodes in particular
looking headlights. The light colour that they
are regarded as an important technology of the
produce is almost daylight white, and the colour
future that will also transform the car world in
temperature is higher than that of xenon head-
the next few years. And Audi is one of the key
lights. This light appears brighter and more
players behind this development.
agreeable to the eye, contrast vision is aided and
The Ingolstadt company, working with the light-
driving at night is less fatiguing.
ing experts from the Californian light-emitting
diode manufacturer Philips Lumileds Lighting
LED headlights with cooling fans
and with Automotive Lighting, from Reutlingen,
To keep the relatively high temperatures gener-
is the first car manufacturer in the world to
ated by the operating currents in check, each
develop a headlight in which high-performance
headlight has two small cooling fans for the low-
light-emitting diodes perform all the lighting
beam and high-beam headlights. These fans
LED low-beam headlight
functions: low-beam headlights, high-beam head-
simultaneously circulate the warm air forward to
module: basic light dis-
lights, turn signal lights, daytime running lights
the headlight’s lens, to keep it free from ice in
tribution by an array of
and sidelights. The Audi R8* will be available
winter. A new headlight normally takes at least
four LEDs for each of the
optionally with this revolutionary technology of
two years to develop. “We resolved to have the
upper and lower reflector
the future, as a world first. So-called LED arrays –
LED headlight ready for the Audi R8 in just 18
shells, range and light/
modules consisting of several light-emitting
months,” declares Dr. Wolfgang Huhn, revealing
dark boundary via the
diodes – serve as the light sources. Specifically,
the ambitious nature of this project. The Head
plastic lens from three
basic light distribution for the low beams of the
of the “Light and Visibility” Department at Audi
arrays of two LEDs.
Audi R8 is performed by two LED arrays each
can rely not only on the full commitment of
with four white light-emitting diodes, and each
everyone involved in this project. The many years
emanating from a hemispherical reflector sur-
of experience of Audi engineers in LEDs are also
LED high-beam headlight
face. There are three further LED arrays behind
speeding up the development process. Audi
reflectors: one array of
the plastic lens, supplying the light at the
already unveiled several vehicle studies with
four LEDs per reflector
light/dark boundary and for the range. The light
functioning LED technology three years ago: the
shell.
for the high-beam headlights is generated by
Audi Pikes Peak quattro with strip-shaped LED
the two reflector shells next to the low-beam
fog lights, and the Audi Nuvolari quattro and the
headlights, with LED arrays again used. The LED
Audi Le Mans quattro with LED headlights and
The principle of
LED headlights
1
2
3
LED turn signal:
eight yellow highperformance LEDs.
4
LED daytime running light
1
strips: 24 white Advanced
Power TopLEDs with
3
optical fibres for homogeneous illumination.
2
4
48
AUDI 2006 ANNUAL REPORT
* fuel consumption figures at the end of the Annual Report
become a prominent distinguishing feature.
Lighting expert Huhn is convinced that lightemitting diodes will become the principal light
source for vehicles over the next few years. Not
just because they are smaller, more robust, more
durable and operate more efficiently than halogen and xenon lights. The new light sources are
also exceptionally useful for automotive design
purposes. “LEDs open up unprecedented scope
for design,” explains Andreu Sola Gomfaus,
Head of Lighting Design at Audi. Because the
LED light no longer comes from a single light
source, the LED arrays are very flat and compact
and occupy much less space than conventional
headlights, it will in future be possible to transform the face of a car much more easily. Several
LEDs can moreover be combined in all manner of
shapes, for a striking look.
The design challenges nevertheless remain.
“The designer must give the vehicle a soul, with
emotions and virtues,” explains Sola Gomfaus.
New technologies alone – which every vehicle
manufacturer has access to – will not do the
trick. “The key to success is creativity, a half-way
house between fantasy and logic,” is the guiding
principle of the Audi designer who is playing an
instrumental role in the development of the LED
headlight for the Audi R8. It is always important
for a designer to start considering issues that
might only assume real relevance in a few years’
time. “We already need to start preparing to
meet the future requirements of our customers.
Even if they themselves have no idea yet what
they will want in a few years’ time,” muses Sola
Gomfaus.
Innovative LED vehicle lights will undoubtedly
be one of the items on the wish list. “LEDs are set
to become a typical feature of all premium vehi-
Leading lights
rear lights. At the start of 2004, Audi became the
cles. And we are the trendsetter,” enthuses his
The Spaniard Andreu Sola
first manufacturer to integrate LED technology
colleague Huhn, from Technical Development,
Gomfaus (left) is respon-
at the front of a production model.
who is convinced of the abundant promise of
sible for the design of
lights and wheels at Audi.
On the 12-cylinder Audi A8*, the daytime run-
LED technology. Huhn continues: “I’m sure we
ning lights and the sidelights are produced
will discover many future uses for LED technol-
by five-pointed star-shaped high-performance
ogy that we can’t yet begin to imagine.”
Within Technical Develop-
LEDs that come on automatically as soon as the
ment, Dr. Wolfgang Huhn
engine is started. The new Audi S6* features
is Head of the “Light and
daytime running lights in the form of an eye-
Visibility” Department.
catching LED strip that distinguishes it even
“Nothing is more exciting than technology,
from afar.
especially for cars,” says Fred Wagner.
Light-emitting diodes have also already made
their appearance on the vehicle’s tail end. Red
The 48-year-old native of Berlin first studied
Mechanical Engineering, subsequently
LEDs are now standard in the raised brake lights
spending many years working as a development engi-
on all models. Audi has applied this technology
neer. Wagner has spent the past few years working
for the tail, brake and even indicator lights at
as a freelance journalist, writing regular articles on
the rear of the A8. On the Audi A6, the LED tail
innovations in the automotive world for various media
light signature specifically for the A6 Avant has
including Handelsblatt.
AUDI 2006 ANNUAL REPORT
49
Across Down Under
The first koala to cross
Australia holds on tight to
the famous four rings.
Audi Q7 Australian Trans-Continental Crossing 2006
Broome
Sydney
50
AUDI 2006 ANNUAL REPORT
Inspired by a book on early outback pioneers,
Jörg Hofmann, Managing Director of Audi Australia Pty
Ltd., came up with the idea of a Trans-Continental
Crossing to mark the Australian launch of the Audi Q7.
What began life as a simple road trip quickly snowballed into a full-scale media event that would pit fifteen
Audi Q7 models against 7,000 km of the most remote
and punishing roads on Earth. Text and photos Sam Tinson
TECHNOLOGY: ENDURANCE TEST FOR THE AUDI Q7
Sept 3: Sydney,
New South Wales
n on a busy
A red light changes to gree
oy of
conv
Sydney street, and our
ls snakes
mode
Q7
Audi
fifteen gleaming
fic. On the
traf
ing
morn
midthe
into
k gecko
bonnet of each car is a blac
symbol of
e
ntur
adve
motif, the offroad
these
that
clue
a
and
a
rali
Audi Aust
on
seen
Audi Q7s, the first to be
in store
Australian roads, have more
l
loca
the
to
trip
a
for them than
ion is
inat
dest
our
fact
In
s.
shop
7,000 km
Cable Beach in Broome, over
those
For
a.
rali
Aust
ern
away in West
part, the
ng
taki
be
to
gh
enou
y
luck
the journey
next three weeks will be
d’s first
worl
the
For
of a lifetime.
will be
it
SUV,
at
n-se
seve
premium
the ultimate test.
Audi Q7 Club. Journalists
and members of the Audi team
outside the Packsaddle
Roadhouse on the Silver City
Highway, New South Wales.
Below: Cameron’s Corner,
where New South Wales,
Queensland and South
Australia converge.
Sept 4: Lake Mungo
National Park,
New South Wales
Today we hit dirt roads for
the first
time, and as we bid farewell
to the
bitumen there’s a feeling
that we’re
leaving civilisation behi
nd. In
fact Lake Mungo was the site
of the
earliest civilisation in
Australia;
Aboriginal artifacts dati
ng back over
40,000 years have been foun
d here.
The landscape looks the part
too.
Wind and rain have carved
the sand and
clay into surreal forms,
including
the famous Walls of China,
a series
of sculpted dunes 30 metr
es high and
over 33 km long. We’re bare
ly one
day out of Sydney, but it
feels like
we’ve arrived on Mars.
ll,
Sept 6: Broken Hi
es
al
W
New South
blowing
in from
ill wind
Despite the ch
oken
Br
in
re
he
e atmosp
the desert, th
1883
in
d
he
is
bl
ta
. Es
Hill is heated
scovered
posits where di
when silver de
w serves
no
’
ty
ilver Ci
in the area, ‘S
the
to
y
wa
te
ga
les’
as New South Wa
troin
an apt place to
outback. It’s
motors
a’
li
ra
Q7 to Aust
duce the Audi
ge
an
ch
Ex
l
ya
Ro
the
ing press, and
ty as
ng with activi
Hotel is bustli
d out
ie
rr
ecks are ca
last minute ch
the
on
d
fe
ie
s are br
and journalist
part
de
we
ow
rr
mo
To
upcoming trip.
e bush,
campsite in th
for our first
–
ed
ud
cl
media in
and everyone –
is excited.
AUDI 2006 ANNUAL REPORT
51
ra,
Sept 8: Tiboobur
es
al
W
New South
we
go, the
the bush
The deeper into
booburra
Ti
.
me
co
wns be
smaller the to
with
nt
me
le
tt
se
k
ac
is a tiny outb
and not
es
ndful of hous
two pubs, a ha
ed city
nt
te
r
ou
erecting
much else. By
tically
ac
pr
e
’v
we
wn
to
on the edge of
. Our
cal population
doubled the lo
an excelto
f
ve got of
support crew ha
elter
sh
,
od
fo
g
in
ovid
lent start; pr
thirty
for upwards of
and sanitation
s is
ce
an
st
ch long di
people over su
ready
be
st
mu
s
te
Campsi
no easy task.
that
ew
cr
, and for the
when we arrive
–
oy
nv
co
e
ahead of th
means staying
ns
va
ed
ad
lo
o fully
not easy in tw
mping
packed with ca
towing trailers
gear.
Sept 9: Innamincka,
South Australia
Camp Audi. The support crew became experts
at dismantling thirty tents, transporting them
hundreds of kilometres and re-erecting them
at the next campsite ready for our arrival. How
they managed it remains a mystery.
We break camp jus
t in time to avoid
a rainstorm, and
around 70 km out
of
Tibooburra the roa
d crosses a vast
dry
lake bed. The tem
ptation to floor
it
across the cracke
d clay surface is
too much for some,
and the convoy dis
integrates in a clo
ud of red dirt as
half a dozen Audi
Q7s break ranks and
accelerate toward
s the horizon in
all
directions. Once
discipline is restored we press nor
thward to Cameron's
Corner, a remote
, sun-scorched
junction where the
state boundaries
of New South Wales,
South Australia
and Queensland con
verge. The couple
who run the ‘Corne
r Store’ sometimes
go weeks without
seeing a customer,
so they’re deligh
ted to see thirty
turn up at once.
In a matter of
minutes we clean
them out of tea,
cake and souvenir
beer coolers.
aThe afternoon’s drive is an exhil
rating 200 km roller-coaster ride
over the parallel sand dunes of the
Strzelecki Desert. As we enter the
desolate plains of the Moomba gas
ng
fields a sandstorm blows up, slowi
near
was
It
.
crawl
a
to
y
the convo
here that an earlier trans-continental attempt – the ill-fated Burke
and Wills expedition of 1861 – came
to its tragic end. What would Burke
and Wills have given to exchange
Q7s?
their camels for a couple of Audi
52
AUDI 2006 ANNUAL REPORT
TECHNOLOGY: ENDURANCE TEST FOR THE AUDI Q7
ille,
Sept 10: Birdsv
Queensland up overnight,
and a
kept
The wind has
ept
sw
be
to
of sand has
thick layer
ka Hotel
nc
mi
na
In
e
es of th
off the tabl
ast. Still,
n eat breakf
ca
we
re
befo
me to give
sville in ti
we reach Bird
anerica,
pp
Na
a run up
the Audi Q7s
stralia.
Au
in
ne
du
sand
the tallest
er known
tt
ppanerica, be
Conquering Na
of
l
ai
Gr
is the Holy
as Big Red,
but the
,
ty
ni
er
at
4WD fr
Australia’s
the
light work of
ke
ma
s
Q7
di
Au
rnoon
te
af
spend the
challenge. We
p slope,
ee
st
e
th
and down
y
hurtling up
on Dakar Rall
growling as
the engines
d
le
il
ch
lebrate with
cars, then ce
ges into the
the sun plun
as
e
champagn
ems a long,
rt. Sydney se
Simpson Dese
.
long way away
Crossing the
giant Nappanerica
sand dune,
also known as
Big Red.
In the South Australian outback
the temperature
would drop
dramatically at
night, making
the campfire the
best place for
a beer and a yarn.
Sept 12: Clayton River,
South Australia
Today the cars face another
outback
trial, the legendary Bird
sville
Track. This notorious road
is strewn
with potholes, boulders
and splintered rock, but it proves
no match
for the Audi Q7s. The cars
’ adaptive
air suspension irons out
the bumps and
we make camp hours ahead
of schedule.
Even Johannes Strobl, the
ice-cool
‘Flying Technician’ from
AUDI AG, who
has travelled from Ingolsta
dt to be
on the trip, can’t hide his
approval.
A sign written in Aboriginal slang
advises drivers to reduce speed.
The reverse side of the barrel says
“PUTTUM BACK DOWN”.
AUDI 2006 ANNUAL REPORT
53
TECHNOLOGY: ENDURANCE TEST FOR THE AUDI Q7
Sept 18: Yulara,
Northern Territory
Yulara is a huge
resort complex bui
lt
in the middle of
the desert to
accommodate touris
ts visiting Uluru
(Ayers Rock) and
Kata Tjuta (The
Olgas). It’s the
halfway point of
our
journey, a chance
to recuperate
and prepare for the
final stage. Our
trusty Audi Q7 veh
icles have been
cleaned inside and
out, and look lik
e
they’ve come straig
ht from the showroom. They’re in
showroom condition
too, despite the
flogging they’ve
had over the last
two weeks. The onl
y
maintenance needed
is a precautionar
y
change of air fil
ters. There’s
nothing more to do
now but drive out
to Uluru and watch
the giant monoli
th
blaze orange, amb
er and crimson in
the last rays of
the setting sun.
We all agree it’s
a sight well worth
driving 5,000 km
to witness.
The local Aboriginals believe Uluru to be a highly sacred place.
Seeing it at sunset, it’s easy to see why.
Who said going bush
means you have to
rough it? Dinner with
a view of Uluru at
the Yulara Resort.
Sept 20: Tilmouth Well,
Northern Territory
a
The last three days have been
icons;
an
rali
Aust
of
tour
stop
whistleon
Uluru, Katu Tjuta, Kings Cany
forma(whose dramatic geological
film
the
in
us
famo
made
tions were
rt)
Dese
the
of
n
Quee
a:
cill
Pris
ide crater
and Gosse’s Bluff, a 5 km-w
orite
mete
mic
clys
formed by a cata
s ago.
year
ion
mill
140
over
impact
ern end
We’re now camped at the east
k, and
of the legendary Tanami Trac
rt,
Dese
mi
Tana
the
lies
us
ahead of
arid
one of the most isolated and
t expect
places on the planet. We don’
rs
tsee
sigh
many
to bump into
tomorrow.
54
AUDI 2006 ANNUAL REPORT
Sept 23: Broome,
Western Australia
Sept 21: Rabbit Flat,
Northern Territory
The cattle drovers who first used the
Tanami Track knew that the best route
across a desert is a straight one;
we drive over 450 km today without
turning a corner. The landscape is
by turns alien (millions of termite
mounds stretching to the horizon)
and apocalyptic (scorched earth and
trees blackened by bushfire), and the
emptiness is interrupted only by the
occasional monster road train. Our
campsite is at Rabbit Flat, home to
the most remote roadhouse – and the
most expensive petrol – in Australia.
Faced with a choice of paying $2.25
per litre or driving 500 km to the
next servo, we bite the bullet and
fill up all fifteen cars. Bruce,
the owner, is probably still laughing
now.
The end of our voy
age in sight, we
set
the Audi Q7s to cru
ise control and
let the cars eat
up the final 700
km to
Broome. We roll int
o town ahead of
schedule, and on
the endless sands
of
Cable Beach the cha
mpagne corks pop
for one last time.
Three weeks ago we
set out from Sydney
with 7,000 km of
Australia’s toughe
st terrain to tac
kle;
ahead of us now lie
s only the Indian
Ocean and the set
ting sun. A contin
ent
has been crossed,
and the mutual sen
se
of achievement amo
ng us is palpable.
The real heroes how
ever are the Audi
Q7
models. Between
them, the fiftee
n Audi
vehicles have tra
velled a total of
105,000 km across
the outback, mos
tly
in conditions far
tougher than the
y
will ever see in
normal use. And yet
we suffered not a
single breakdown
or
mechanical fault;
in fact, aside
from the occasiona
l tyre change, our
dly dirtied their
technical crew har
feel a glow of
hands. So while we
ssing Australia
cro
in
satisfaction
said
st, it has to be
from coast to coa
have
ld
cou
one
any
that in an Audi Q7,
done it.
tish
Sam Tinson is a Bri
moved
He
t.
lis
rna
photo jou
4 in
200
in
lia
tra
Aus
to
h the outback.
order to photograp
ney and writes for
He now lives in Syd
and motoring
vel
tra
n
the Australia
lishes articles
press. He also pub
azine.
regularly in GQ mag
Filling up straight from the
barrel on the Tanami
Track, Western Australia.
Journey’s end, and a
perfect sunset on Cable
Beach, Broome.
AUDI 2006 ANNUAL REPORT
55
TECHNOLOGY: SERVICE PROGRAMME
Audi Australia
Even if the nearest
Audi Centre is
2,000 km away, Audi
Service is at hand
when needed.
56
The Trans-Continental Crossing proved beyond
to drive to locations outside the normal prime
doubt the reliability and endurance of the
market area”, suggests Hofmann.
Audi Q7, and for Audi Australia that has meant
Audi Australia has begun establishing satel-
an increasing number of sales in remote
lite service centres away from their city show-
outback locations. Providing premium client
rooms, and these facilities will obviously in-
service to these areas calls for a unique after-
crease as the customer network grows, with
sales strategy, as Jörg Hofmann, Managing
increased scope in rural centres.
Director of Audi Australia, explains: “The Trans-
Providing a foundation for all these initiatives
Continental Crossing certainly raised Audi’s
is the Audi Modern Apprenticeship Program
profile in rural Australia. There was a great deal
(AMAP) a registered training organisation for
of interest in the Audi Q7 in towns we passed
young automotive technicians organised and
through such as Broome and Birdsville, with
run by Audi Australia.
some buyers actually flying in to view the new
“AMAP is a four-year apprenticeship run in
car and placing orders on the spot. It’s our aim
conjunction with our dealerships,” says Hof-
to give these customers the same premium
mann. “The program produces technicians
service that Audi provides to its clients in
who are distinguished by their competence
urban centres.” There are a number of ways to
and loyalty to Audi as they have started their
achieve this. One is to fly Audi technicians to
apprenticeship with the brand. We also have
remote locations. For instance, the nearest
full-time technical trainers who run training
Audi Centre to Broome is over 2,000 km away
programs on all models, so our technicians
in Perth, so a technician will fly from there
are always up to date with the latest service
to conduct service clinics for our Broome
procedures. AMAP is a clear benefit over our
clients.
competitors – no one else offers this. In the
“We are also looking into other possible solu-
long term it means our customers are guaran-
tions, one of which could be a fleet of ‘Audi
teed the highest possible level of customer
Mobils’ – fully-equipped service vehicles able
service.”
AUDI 2006 ANNUAL REPORT
PHOTOS: SAM TINSON
bringing “Vorsprung durch Technik”
to the outback
TECHNOLOGY: FOR THE SAKE OF SCIENCE
Cars and archaeology
How a 2,000-year-old mummified bird from Egypt came to
be scanned in the Audi computer tomograph. Text Er ic Felber
It was revered as a sacred bird in Ancient Egypt. The Ibis (Threskiornis
aethiopicus) was believed to be the incarnation of the moon god Thoth and,
after its death, was used as an embalmed offering and burial object. One
such specimen of a mummified bird
around 2,000 years old, from Abydos in
Egypt, found its way to the Audi plant
in Neckarsulm in August 2006, through
the mediation of the Hesse State
Museum in Darmstadt and the State
Museum of Württemberg. At Neckarsulm, the antique treasure was put
through a series of tests that are otherwise only performed there on complete vehicle bodies, in a computer
tomograph that is the only setup of its
kind in the world.
The accuracy of the 3D x-ray machine
used at AUDI AG is in the order of onehundredth of the breadth of a human
hair (about one micrometre). This was
Sacred bird in the Audi
computer tomograph:
a highlight of scientific
research.
the first time it had been used for purely
archaeological purposes. Dr. Erwin
Keefer, from the Württemberg State
Museum, found this unusual source
of assistance by the car manufacturer
invaluable: “The uniquely high-resolution pictures are a great help to us in
our research. This is the first time in
Germany that it has been possible to
screen a mummified object using an
industrial CT system.” The images that
PHOTO: AUDI
the x-ray robot delivers are up to 50
times sharper than conventional ones.
million euros and weighs some ten
cule electronic components just three
The images even make it possible to
tonnes, for scanning weld seams and
millimetres across can equally be scru-
examine the bird’s feather stalks for
punched and clinched joins on vehicle
tinised in the Audi CT.
the most minute of details.
bodies. “This method represents an
The experts at Audi investigate
Like the phoenix from the ashes, the
important new departure in that parts
several entire vehicle bodies each year.
bird of antiquity is resurrected in com-
can now be examined without any con-
This involves measuring every detail of
prehensive detail in front of the re-
tact and non-destructively,” explains
thousands of joins and evaluating
searchers’ eyes: “We can unwrap the
Dr. Manfred Sindel, from Aluminium
them non-destructively.
mummy entirely without physically de-
Technology Quality Assurance at Audi.
The results of the successful experi-
stroying its exterior,” explains Michaela
It was previously necessary to cut
ment are now to be put to creative
Kurbel, taxidermist of the Hesse State
components laboriously out of the
use by the scientists: thanks to the
Museum in Darmstadt, delighted at the
body in order to examine them for any
3D images from the CT, the Ibis is
new findings that would have remained
inaccuracies. Even body components
destined to spread its wings again. By
hidden without Audi’s assistance.
measuring more than five metres in
computer animation, of course. Per-
The car manufacturer normally uses
length can now be examined in this
haps one day it will even be used on a
the apparatus, which costs around one
way without any problems. But minus-
Pharaoh.
AUDI 2006 ANNUAL REPORT
57
TECHNOLOGY: PHOTOMIX DETECTORS
The seeing diode
New developments from the electronics
powerhouse of ideas at Audi
A detector operating by means of reflection measurement of
infrared rays is able to pick up spatially whether and what
objects are present in front of a vehicle. It converts the data into
images that improve in quality the more pixels they contain.
The developers at Audi Electronics Venture GmbH have a market
of the future in their sights. Text Johannes Köbler // Photos Angelika Emmerling
58
AUDI 2006 ANNUAL REPORT
T
he future is already taking shape on an
The photons, once converted into electrons,
industrial estate in Gaimersheim, near
are separated by a so-called charge carrier and
Ingolstadt. That is where Audi Electron-
can thus be represented pixel by pixel. Three
ics Venture GmbH (AEV), the Audi powerhouse
chip types currently exist. The first and oldest of
of ideas in the field of electronics, is based in
them operates at 1,024 pixels, the second one at
one of the office blocks. There is a workshop on
3,072 pixels, and the third one at an impressive
the ground floor. Torsten Gollewski, Head of
29,200 pixels, packed into a silicon surface meas-
Strategy and Finance at AEV, has arranged for
uring less than one square centimetre.
a black Audi A8 to be brought into the room; at
“The number of pixels compared to a digi-
first glance it looks like any other car. Yet it is
tal camera does not sound high,” remarks
capable of doing something quite remarkable:
Gollewski, but then adds with fatherly pride:
it can “see spatially”, in a radically new way.
“But then those chips can only see two-dimen-
Not with the aid of cameras or radar, but with
sionally. In our diode, every single pixel takes
photonic mixer devices (PMD).
its own distance measurements.” The square
Images from the
29,200-pixel chip, showing both grey value and
distance pictures.
PMD technology is excitingly high-tech in its
pixels themselves are minute – on the latest
realisation, yet astonishingly simple in principle.
chip, each one has an edge length of just
A light source – positioned on the upper edge of
0.04 millimetres, not even half the breadth of a
the single-frame grille on the A8 test car – trans-
human hair.
mits invisible infrared light into the area in front
The 1,024-pixel sensor on the A8 test car can
of the car. It is reflected by the objects there and
see for 40 metres and it converts the information
returned to the PMD sensor located in the base
into data 100 times a second. In the test setup,
of the interior mirror. Detectors in the sensor
the images that it supplies appear on a large
measure the time the light rays take to arrive and
monitor. A person walking in front the radiator
match them against a reference signal, thus pro-
grille is visible in the raw data as an angular
ducing information on how far off the objects
“human pictogram”, then in the refined data
are. Because the speed of light is obviously very
record as a “walking fir tree” in the three-dimen-
high, the measurement is ultra-precise, to the
sional setting. On the 29,200-pixel chip, the im-
nearest 6.6 trillionth of a second.
age is already much more differentiated,
>>
AUDI 2006 ANNUAL REPORT
59
TECHNOLOGY: PHOTOMIX DETECTORS
Top right: a triple representation of the 1,024pixel chip in the test
setup; bottom right: a
double representation;
top left: an image
“reconstructed” from
processed distance data
(the colours change
according to distance);
bottom left: a colourcoded long-distance
image.
and in fact is rather reminiscent of those old,
the automotive sector, too, it is considered a hot
flickering newsreel pictures from the 1920s.
topic with the capacity to transform major mar-
The PMD sensors are superior to technologies
kets radically. Robots will be able to see with mil-
generally available today. A conventional camera
limetre precision thanks to PMD diodes, and
supplies only a two-dimensional image, which is
fork-lift trucks will navigate a warehouse accu-
useless for dynamic ambient recognition. A 3D
rately. The sensors are moreover suitable for use
scanner needs an expensive apparatus about the
in medical technology and in multimedia – for
size of a coffee machine. And a radar sensor clas-
games consoles and cameras.
sifies objects merely as dots. PMD sensors, on
60
the other hand, can identify relevant objects in
“Letting the imagination roam”
front of the vehicle much more effectively thanks
“It is still early days, but there is ample scope for
to the high number of 3D points. They also func-
letting the imagination roam,” states Dr. Bernd
tion in the dark, and are not susceptible to inter-
Buxbaum. He, together with Torsten Gollewski, is
ference e.g. in the form of direct sunlight. They
one of the two directors of the Siegen-based
are furthermore so small that they can be in-
high-tech company PMDTechnologies GmbH.
stalled anywhere.
The technology originated in this town in south-
“We can use PMD sensors for identifying the
ern Westphalia. Professor Rudolf Schwarte, a re-
car’s environment – for prompting emergency
searcher at the local university, filed the trailblaz-
braking, assisting lane changes or facilitating
ing patent in 1996 after many years of effort.
sensor-controlled parking manoeuvres,” ex-
With the backing of the Federal Ministry for
plains Torsten Gollewski. “And with a sensor in
Research, he and his assistants created the first
the interior we can also observe the front pas-
diode prototypes by 2001.
senger’s posture, so that the airbag is accurately
Once contact had been established with AEV,
activated in the event of a collision. Or imagine
PMDTechnologies was founded in May 2002. It
one day being able to operate your Audi merely
operates as a joint subsidiary of AEV and ifm
by hand signals that the sensor can recognise.”
electronic GmbH, Essen, which is active in the
According to Torsten Gollewski, PMD technolo-
field of automation technology. The Essen
gy will be making its appearance in vehicles from
company, which has already carved out a major
the Audi brand “in the near future”. Away from
competitive edge, already succeeded in selling
AUDI 2006 ANNUAL REPORT
Torsten Gollewski next
to the PMD’s chip design.
It shows the highly
magnified structure of
the 1,024-pixel chip.
around 20,000 PMD sensors in 2006. The prices
market, as well as paving the way for the estab-
should come down rapidly as production volume
lishment of joint ventures. AEV brings together
increases. A complete PMD unit currently costs
people, knowledge and capital in its core dis-
between 75 and 260 euros, depending on the
ciplines of electronics architecture, sensor
quantity ordered and its application. In a few
technology and software; it generates beneficial
years the price will fall again quite significantly
effects for the group parent by managing tech-
thanks to the continuing integration of system
nology and market requirements.
components into the PMD silicon. “PMDTechnologies is a prime example of a company spun
“Small islands of innovation”
off from university research activities, which is
AEV regards its small scale – it employs fewer
unfortunately still a rare breed in Germany,”
than 100 employees – as a positive virtue thanks
summarises Torsten Gollewski. And the story
to the flexibility that this allows; flexibility is a
continues. 60 specialists are working on incorpo-
vital attribute on the electronics and software
rating photonic mixer devices into cars – at AEV,
scene, where product cycles are much shorter
PMDTechnologies and the supplier Harman/
than in the car business. The think-tank in
Becker, which is also involved. The project has
Gaimersheim serves as an uncomplicated dock-
also garnered acclaim at a political level. The see-
ing-on point to the parent company Audi for
ing diode was nominated for the German Future
external start-ups.
Prize in 2002, and in 2005 it captured the Hermes
Award, one of German industry’s top technology
prizes. In the same year, Professor Schwarte was
awarded the Federal Order of Merit (First Class)
“Modern technology is immensely enjoyable,”
in recognition of his research work.
believes Johannes Köbler (44). The freelance
The example of the PMD diode demonstrates
motoring journalist has been monitoring
how AEV, founded in 2001 and a fully-owned
developments in the car industry for the past
subsidiary of AUDI AG, operates. The technology
15 years. “Technology is exciting. But the most exciting
scouts from Gaimersheim track down innovative
thing is the people who are behind it,” he says. Köbler
basic technology at an early stage and help
has also penned a profile of Wolfgang Hatz and his new
to bring it to production maturity and onto the
TFSI engines (page 20) for the Audi Annual Report.
AUDI 2006 ANNUAL REPORT
61
TECHNOLOGY: IN BRIEF
Toolmaker
of the Year
Audi Hungaria
Institute
The Toolmaking Division of AUDI AG
has won the competition “Excellence in Production” for the second
time, adding to its achievement in
2004. The division fended off 321
The decision was taken to
other toolmakers and mould makers
establish the Audi Hun-
also challenging for the coveted
garia Institute in Budapest
award. The Audi Toolmaking Division
in 2006. This joint venture
operates as an independent enter-
between Audi and the
prise under the umbrella of AUDI AG.
Technical University
Its customers include the group
of Budapest will increase
brands Audi, Lamborghini, Bentley,
the knowledge transfer
SEAT, Škoda and VW, as well as ex-
between the spheres of
ternal carmakers.
research and application.
“I am confident that the
The Audi Toolmaking Division scooped the award for the
second time.
partnership will lead to
new research and development findings,” declared
Prof. Dr. Martin Winterkorn
Distinction of world’s most
powerful car diesel engine
at the signing of the framework agreement. Audi will
award various one-off
Audi is the maker of the world’s first twelve-cylinder diesel engine to be
projects to the Technical
used in a production car. This world “first” is fitted in the Audi Q7 and was
University of Budapest.
unveiled to journalists in Ingolstadt in the autumn. Audi has already
demonstrated how well motor racing and production technology comple-
Honorary professorship at Technical University
of Chemnitz
ment each other with the FSI engine. The Audi Q7 V12 TDI evokes associations with the engine of the R10 racing car for Le Mans, which became the
first compression-ignition engine to win the famous 24-hour race. Audi sets
new standards of TDI technology with the 12-cylinder power unit. The Gyó´r
plant, in Hungary, is to build the 368 kW (500 bhp) engine with a torque of
1,000 Newton-metres.
Elegant power
pack – the
500 bhp TDI
engine.
Dr. Jochem Heizmann,
Board Member for
Production at AUDI AG
until January 31, 2007, was
awarded an honorary professorship at the Technical
University of Chemnitz at
an official ceremony in December 2006. The honour
was granted to mark the
launching of the new bachelor’s and master’s degree
course of Automotive Production at the Faculty of
Mechanical Engineering.
62
AUDI 2006 ANNUAL REPORT
World premiere
Audi heralded in a new chapter in its
corporate history with the world
debut of the R8* at the Paris Motor
Show, by bringing the flair of motor
racing onto the roads. “This car extends our model range upwards and
provides our brand with even greater
impetus,” announced Prof. Dr. Martin
Winterkorn. The V8 FSI mid-engine
developing 309 kW (420 bhp), quattro
permanent four-wheel drive and the
aluminium body provide the basis
for superior handling characteristics.
The mid-engine sports car went into
production at Neckarsulm in September 2006 and the R8 will be
in brief:
The Audi R8 made its first public
appearance at the Paris Motor Show.
appearing on the market in the first
half of 2007.
technology
Top marks for safety
In 2006 the Audi A4 and A6 were awarded the “Top Safety Pick” for the second
time in succession in recognition of their outstanding reserve safety. Audi is
consequently the only German manufacturer to have received two awards from
the US Insurance Institute for Highway Safety (IIHS). To merit the top mark, both
models had to come through exhaustive frontal, rear-end and lateral crash tests.
Bavarian
Prime Minister
driving an Audi
The IIHS regularly conducts crash tests with vehicles on behalf of the American
insurance industry in order to assess their standard of safety.
The brand with the four rings became
the mode of travel of a Bavarian Prime
Minister for the first time in 2006. In
November, Dr. Edmund Stoiber took
receipt of the keys to a very special
premium-calibre vehicle from Ingolstadt: the armour-plated Audi A8 L
W12 Security. This car meets very rigorous safety requirements and has
been granted the highest security
classification by the Wiesbadenbased Federal Criminal Police Office.
PHOTOS: AUDI
Edmund Stoiber taking receipt of the
keys to his armour-plated Audi A8.
Exhaustive testing to earn the distinction of “Top Safety Pick”.
* fuel consumption figures at the end of the Annual Report
AUDI 2006 ANNUAL REPORT
63
“In areas of activity that place the emphasis
on cognitive working conditions, ample scope
for decision-making and well-qualified
employees, an ageing workforce if anything
means added expertise.” Dr. Martina Morschhäuser
Above: Dr. Werner
Widuckel,
Board Member for
Human Resources.
Left: Dr. Martina
Morschhäuser,
Deputy Managing
Director of
the Iso-Institut
Saarbrücken.
64
AUDI 2006 ANNUAL REPORT
SOCIETY: DEMOGRAPHIC CHANGE
Breaking new ground
Handling demographic change as an entrepreneurial task: a discussion between Audi Board Member for Human Resources Dr. Werner
Widuckel and demographics researcher Dr. Martina Morschhäuser,
of the Saarbrücken Iso-Institut Interview Nico Fickinger // Photos Michael Wiegmann
H
ave we missed the boat on
Audi is not in a position to be giving
to maintain health in the long term,
demographic change in
away money. Can you afford the extra
continue learning on the job and keep
Germany?
cost compared with your competitors?
nurturing the ability to learn.
MORSCHHÄUSER: Demographic initia-
WIDUCKEL: We have no choice in view
WIDUCKEL: We are increasing produc-
tives were launched here, a commission
of the way the age structure of our work-
tivity everywhere from product design
enquiry process set up and intensive
force is developing. But what is equally
to process organisation. That does not
PR work done as early as the 1990s. In
clear is that we need to meet our profit
automatically mean that work increases
terms of the health and employment
targets in order to finance our sched-
in intensity for the employees. Perfor-
rate of older people, the Scandinavian
uled growth under our own steam.
mance is determined most critically by
countries are some way ahead of us.
Additional outlay for coping with demo-
ergonomics and workplace organisa-
On the other hand Italy, Spain and
graphic change therefore needs to be
tion. When these are handled properly,
Greece, and to a lesser extent France
funded by other means.
employees
and Austria, are lagging well behind us.
can
actually
contribute
more with less effort. Good working
Compared with these latter countries,
Audi is aiming to accomplish the
conditions consequently boost produc-
Germany has already adopted an exem-
planned increase in production output
tivity. For employees to be motivated,
plary role in handling demographic
without recruiting extra workers. Is that
they need prospects that we are offer-
change.
possible with an ageing workforce?
ing them in the form of personal devel-
WIDUCKEL: Until now we’ve found it
MORSCHHÄUSER: Older workforces are
opment paths and secure employment.
relatively easy to reach a consensus
not in themselves a problem, and older
We can organise the conditions of per-
with people on pre-retirement part-time
workers are not fundamentally less effi-
formance and scope for development in
arrangements and semi-retirement as
cient than younger ones. In areas of
such a way that the current success of
mechanisms for taking them out of the
activity that place the emphasis on cog-
the company can not only still be
employment process. Now, however,
nitive working conditions, ample scope
achieved but actually increased with an
we need to focus the entire occupation-
for decision-making and well-qualified
ageing workforce.
al biography on the fact that we need to
employees, an ageing workforce if any-
consider the ability of people to perform
thing increases your expertise. On the
Do the figures add up?
and develop beyond the established
other hand, in other areas of work that
WIDUCKEL: Of course. It is better and
age limits. This paradigm shift does not
involve considerable strenuous activity,
more advisable to invest in the work-
merely represent a human resources
the efficiency of older workers may be
force’s performance than to buy people
and socio-political task; it harbours con-
impaired for reasons of health, resulting
out of occupational activity for huge
siderable competitive relevance if a
in more days lost due to unfitness for
sums of money. Rising life expectancy
company’s efficiency is to be main-
work. This is a challenge to both com-
also means that today’s sixty year
tained long-term.
panies and the employees themselves
olds are now capable of a higher
AUDI 2006 ANNUAL REPORT
>>
65
SOCIETY: DEMOGRAPHIC CHANGE
Grabber workshop learning
station: Dr. Widuckel with
apprentice mechatronics constructing Euro-type grabbers
for the Audi A5 body shop.
performance than their corresponding
Is the workforce with you on that?
The dual vocational training system is
age group was in 1950. So we are using
WIDUCKEL: The response is tremen-
occasionally accused of forcing people
performance potential that used to be
dous. Employees receive a diagnosis
to specialise too early. Some claim that
fundamentally unavailable.
obtained using state-of-the-art medical
a leaner basic training with modular
MORSCHHÄUSER: Forward-looking train-
equipment, and expressed in the form
supplementary training would be better.
ing and promotion of health is not
of a health profile. It is followed directly
MORSCHHÄUSER:
worthwhile for companies that are only
by a consultation meeting where they
training that engenders a passion for
interested in their next set of business
are given recommendations ranging
learning, promotes independent initia-
figures. You have to plan on a longer
from medical treatments to mobility-
tive and teaches the ability to learn is of
time horizon, like Audi. Nor is it possible
enhancing measures. The employees
key importance specifically in paving
to quantify every achievement. How are
appreciate and welcome this intensive
the way for further and advanced train-
you supposed to measure a boost in
advice in particular. The Audi Checkup –
ing in the course of professional life. Us-
motivation or improved product quality
readily accessible, rapidly available
ing this as a basis, continuous training
as a result of higher qualifications?
and with individual consultation – pro-
processes that must not be confined to
These are all significant factors, but
vides a quality of service that is unavail-
formal measures are needed to assure
they cannot easily be expressed in
able in the public health system in this
an ongoing process of qualification
figures.
form.
throughout a person’s working life. Over
What is Audi doing to keep its workforce
After all, every company wants to keep
mally within the working process. That is
in trim?
its sickness figures as low as possible.
why ideas focusing on learning-friendly
WIDUCKEL: We have done a tremen-
Might Audi stand accused of this being
workplace organisation, teamwork, job
dous amount to reduce the rate of in-
just a publicity stunt?
rotation and project assignments are
dustrial accidents. We are at pains to
MORSCHHÄUSER: I don’t think so. For a
important. We need to integrate work-
meet the highest possible ergonomic
start, the health check is only one of a
ing and learning.
standards. And we are providing more
comprehensive package of measures,
WIDUCKEL: We are specifically trying
incentives for people to look after their
accompanied by ergonomic and organi-
out some new directions in the pilot
health in the form of a comprehensive
sational measures. Secondly, it is not
project “Human Resources Develop-
diagnosis system called “Audi Checkup”.
necessarily a question of inventing new
ment for Pay-Scale Employees”. For in-
Within five years, we want to be able
strategies. An age-appropriate employ-
stance, employees from toolmaking are
to provide every employee with their
ment and human resources policy may
also deployed in the press shop. Partic-
individual health profile through this
also involve companies extending and
ularly for committed employees, that
system.
intensifying proven measures.
is an attractive proposition that
Thorough
basic
70 percent of learning takes place infor-
66
AUDI 2006 ANNUAL REPORT
>>
“We are providing more incentives for people
to look after their health in the form of a comprehensive diagnosis system called ‘Audi
Checkup’. Within five years, we want to be able
to provide every employee with their individual
health profile through this system.” Dr. Werner Widuckel
Above: working
ergonomically on
the Audi A3
assembly line.
PHOTO (RIGHT): AUDI
Right: diagnosis
and consultation
following the
Audi Checkup.
AUDI 2006 ANNUAL REPORT
67
SOCIETY: DEMOGRAPHIC CHANGE
Model-making
training workshop:
Dr. Widuckel and
Dr. Morschhäuser
speaking with
apprentices.
“It may be that less intensive work, spread
over 38 hours a week, is more tolerable than
a tightly scheduled 35-hour week. Until now,
the mantra has been that a shorter working
week safeguards employment.” Dr. Werner Widuckel
permits life-long learning and also vo-
want to retire as early as possible. Work-
different working cycles – doesn’t that
cational development along the entire
ing conditions that promote motivation
mean people will have to be content
process chain. Varied work and learning
and commitment also permit a longer
with stagnating or falling income?
experience not only promotes flexibili-
working life.
WIDUCKEL: The issue of demographics
ty; it also influences the process of age-
becomes relevant at two points in the
ing quite considerably. Ageing is a so-
When you consider both of these chal-
process of collectively negotiated pay.
cial process as well as a sociological
lenges to human resources – better-
Let’s look at working life first: I can’t
one. A working life without scope to de-
qualified people who have reached the
imagine anyone still working on vehicle
velop, with severely restricted learning
glass ceiling and people of more limited
assembly at 67. But if we are to make an
challenges, will merely make people
performance who need longer breaks or
earlier exit possible, the worker has to
The age structure of AUDI AG 2006
Male
#
#
#
#
#
#
#
#
3
3
#
#
#
#
#
#
#
#
#
#
#
#
#
#
3
3
3
3
21 – 23 years #
#
#
#
#
#
#
#
#
#
3
3
3
3
#
#
#
#
#
#
#
#
#
#
#
3
3
3
24 – 26 years #
#
#
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#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
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3
3
3
3
27 – 29 years #
30 – 32 years #
#
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#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
3
3
3
#
#
#
#
#
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#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
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#
#
#
#
#
#
3
3
3
3
33 – 35 years #
#
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#
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3
3
3
3
36 – 38 years #
#
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#
#
#
#
#
#
#
#
#
#
3
3
3
3
3
39 – 41 years #
#
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#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
3
3
3
3
3
42 – 44 years #
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
3
3
3
45 – 47 years #
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
3
3
3
48 – 50 years #
51 – 53 years #
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
3
3
3
(
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
3
3
3
(
54 – 56 years #
57 – 59 years #
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
3
3
(
#
#
60 – 62 years #
63 – 65 years #
Female
15 – 17 years
939
(2.10%)
747
192
18 – 20 years
1,877
(4.20%)
1,465
412
1,425
(3.19%)
1,118
307
1,693
(3.79%)
1,399
294
2,953
(6.60%)
2,585
368
3,595
(8.04%)
3,237
358
3,764
(8.42%)
3,364
400
4,129
(9.23%)
3,710
419
4,534
(10.14%)
3,976
558
4,705
(10.52%)
4,141
564
3,971
(8.88%)
3,619
352
3,541
(7.92%)
3,188
353
2,635
(5.89%)
2,360
275
2,450
(5.48%)
2,173
277
2,083
(4.66%)
1,849
234
335
(0.75%)
319
16
Total
68
AUDI 2006 ANNUAL REPORT
90
(0.20%)
86
4
44,719
(100.00%)
39,336
5,383
the
mantra has been that a shorter working
and organisation development must be
arrangements. Although we can provide
week safeguards employment. I am now
dovetailed.
some financial support as a company,
saying that longer working weeks can
WIDUCKEL: We need to give people an
we cannot compensate for the complete
also safeguard employment. In addition
awareness that they can do some-
absence of public financing. Otherwise
to these aspects, we need to rethink
thing themselves about their health and
we would no longer have any leeway on
qualifications. How might we organise
their ability to perform. We need to give
other equally important issues of per-
models for life-long learning? That is
older people the sense that they are
sonnel policy. The second question will
where we will need to reach agreement
needed and have something to con-
be how we can organise particular
on qualification times.
tribute. And we have to reward their
contribute
towards
financing
efforts. We will then have made the nec-
working areas above all in production.
In this instance, we need to slow down
So is it time to redefine companies’
essary link between personnel develop-
the pace of work and introduce short
social responsibility as “helping people
ment and entrepreneurial success to
breaks for recuperation. But that means
to help themselves”?
remain an attractive employer in the
that we are facing increased investment
MORSCHHÄUSER: I find the notion of
long term.
outlay and are consciously accepting a
“helping people to help themselves”
fall in productivity.
misleading because it assumes that
ultimately only one party is able to
How can you compensate for such
shoulder the burden of demographic
losses?
change. The responsibility is actually a
Dr. Nico Fickinger is the Economics
WIDUCKEL: If we are not going to start
shared one. Employees can only take
Correspondent of the Frankfurter
cutting pay, then we have to look at
the initiative and actively pursue further
Allgemeine Zeitung in Berlin
working hours. It may be that less inten-
training if appropriate qualifications
(parliamentary editorial team) and
sive work, spread over a longer working
and development options are available
responsible for Human Resources, Wage Policy
week, is more tolerable than a tightly
to them. Conversely, job rotation con-
and the Unions, Environmental Policy and
scheduled 35-hour week. That too repre-
cepts and new approaches to human re-
General Economic Policy. He is a member of
sents a paradigm shift. Until now, the
sources development, for instance, can
the Board of Trustees of the Randstad
only work if the employees are willing to
Foundation, Eschborn, and has been on the
learn new things and change activities.
teaching staff of the Berlin School of
In other words, personnel development
Economics since 2006.
Audi A3 assembly line:
pivoting assembly-line seat.
SOCIETY: TT SCULPTURE ON TOUR
Audi TT conquers
the world
From the “Land of Ideas” to the Middle
Kingdom: successful 2006 tour of Germany
and China for a giant 10-tonne sculpture
The larger-than-life sculpture of the Audi TT stole many a gaze in Germany and China in 2006, as an unusually eye-catching ambassador.
The 10-tonne car sculpture, on a scale of 2.5:1, was created to symbolise the innovative prowess of German technology under the umbrella
campaign “Germany – Land of Ideas” during the football World Cup. The giant sculpture went on display in Berlin first at the Brandenburg
Gate, then beneath the Victory Column. It subsequently stopped off at Munich Airport before continuing on its travels to the Far East.
70
AUDI 2006 ANNUAL REPORT
PHOTOS: AUDI
In November 2006 the sculpture, 10.2 metres long, 3.25 metres high and 4.5 metres wide, then caused a stir in the Chinese capital Beijing:
Prof. Dr. Martin Winterkorn, the former Chairman of the Board of Management of AUDI AG, unveiled the outsize version of the current Audi TT
on Chang An Street, the major east-west axis running through the Chinese capital. In sending its sculpture there, Audi was also emphasising
the importance of the Chinese car market.
AUDI 2006 ANNUAL REPORT
71
SOCIETY: INTERNATIONAL CAR TRENDS
The world of
automotive dreams
Spain: a hint of machismo
Dominique Chidaine started his career with
wheeled baby that they would be hard pressed to
Spaniards
and their cars
the regional daily La Montagne, subsequent-
lend it even to their closest friend. An acquain-
In the aftermath of
ly moving to Paris (Télé Star) and then to a
tance from Barcelona recently admitted to me that
Spain’s economic mira-
press agency based near Toulouse. He is now
he can barely bring himself to hand over his car
cle, the size of a person’s
keys to the security personnel at an underground
car has emerged as an
car park even if he only has a quick errand to do.
indication of a person’s
a freelance journalist living in Barcelona.
tional. So fond are Spaniards of their four-
You have to head into the countryside to find
social advancement. The
Nothing is more important to the Spaniards than
people with a more relaxed view of things, and the
higher they have climbed
the corrida – except, perhaps, for their cars. Blood-
older people are, the more relaxed their outlook
the social scale, the
red and bright yellow, the colours of this Spanish
seems to become. In a society that is undergoing
higher up they sit when
passion, also predominate on the sometimes
radical change, pensioners and the rural popula-
out on the roads. City
chaotic roads. In the home country of Fernando
tion epitomise the more conservative view that a
streets are teeming with
Alonso, young drivers in particular can be seen
car is first and foremost an essential means of
dark-coloured SUVs that
proudly showing off their eye-catching cars. As
transport. This group consequently tends to pre-
provide the perfect foil
soon as they have earned their first cash, they take
fer classic models, ideally in white to fend off the
to the suave elegance of
out a loan to help them invest in securing their
searing heat of the Spanish sun a little more ef-
their immaculately
place out on the roads: after all, roaring engines
fectively. But whether urbanite or country-dweller,
besuited drivers. As en-
and booming hi-fi systems are guaranteed to at-
strapping youth or senior citizen, van driver or
thusiasts of minivans
tract attention. In a country that still has a strong
sports car enthusiast – they all share one pas-
and compact city cars,
whiff of machismo, the car lends itself readily as
sion. The indispensable accessory of every
women too have staked
a symbol of masculinity. The more tuned, the bet-
Spanish car is unquestionably the horn. It cuts a
a claim to their place in
ter. Local lads will hang around their bodega un-
swathe through any traffic jam, turns heads and
the automotive jungle.
til late into the night discussing the latest models
is the perfect accompaniment to the local foot-
and debating hot topics such as the points-based
ball team’s latest victory. In this latter respect, too,
driving licence that was recently introduced.
the Spaniards have remained faithful to their Latin
Their relationship with their car is highly emo-
72
AUDI 2006 ANNUAL REPORT
temperament: early nights are an alien concept.
PHOTO: HANS NELEMAN/CORBIS
While one person drives around in a mobile playroom, another
may relish open-top driving in the rain, while yet another believes
in the power of their car’s horn, or hears the call to “Go West”.
Every nation has its own habits and customs. Four motoring
journalists describe trends in their host countries.
Left: blood red is
the colour of
Spanish passion.
Both in the bullfight and as a car
colour.
Cricket – typically
British. More so,
in fact, than their
taste in cars.
Brits and their
cars
Great Britain:
a kingdom for a car
The car industry is
Gavin Green is an Australian-born motoring
booming in the UK. The
journalist. A former editor of Britain’s Car
Japanese make many of
magazine, he now writes for The Independent,
their European cars here
Motor Trend in America and British Airways
and sales of premium
Business Life.
Tradition-conscious though the British might
be, some things do actually change.
Perhaps most amazing of all, Britain’s car
tastes are becoming German.
Silver, the racing colour of Germany, is now the
nation’s favourite car hue. Green, the national
racing colour of Britain, is meanwhile as fashion-
cars are achieving strong
able as flying helmets. German marques are
growth. Even though, in
becoming ever more popular and dominate UK
premium car sales.
the meantime, all the
Britain is an idiosyncratic country. One of the
former traditional British
world’s modern democratic role models still has
Even the way Brits specify their cars is becom-
brands are now foreign-
an unelected head of state. The most popular
ing German: bigger tyres, firmer suspension, an
owned, to most Britons
sport in summer (cricket) can go on for five days
obsession with engine power and speed. These
they are still as British
and still get no result. Being a British game, there
are all fine in Germany, with its smooth roads
as a pot of Earl Grey, a
is an afternoon tea break.
and speedy Autobahns. But the UK has uneven
jar of Marmite or the comedian John Cleese.
Motoring in Britain is equally quirky. A country
renowned for its rain loves convertibles. It also
loves sports cars, and Britain produces sports
car companies like France produces cheese
streets, low limits and speed camera-studded
roads.
So they’re about as practical in Britain as a
cricket stadium in Berlin.
makers. Most – from AC to Allard to Alta to Alvis
to Arab (yes, there really was a sports car comPHOTO: JUTTA KLEE/CORBIS
pany called Arab) to Austin-Healey (and that’s
just some of the As) – are now either dead or
moribund. Yet this sports car tradition continues
with Britain’s dominance of the world motor
racing industry.
AUDI 2006 ANNUAL REPORT
73
Right: Western
brands and a
Western lifestyle
are highly valued
in China.
Out in the wilderness with all the
family: Americans
swear by their
SUVs.
Howard Walker, editor of MotorUK, the
leading motoring magazine based in London,
baseball practise, to football games, running to
the grocery store or the shopping mall.
Remember that unlike Europe, America was
The car for the
USA
Practical, safe, large –
on the relationship between Americans and
designed around the car rather than the horse.
these are the key attrib-
their cars.
Its roads are wider, its parking spaces bigger.
utes for many Americans
And in the pursuit of the American Dream of a
when they buy a car. The
bigger house and more space, Americans much
continuing trend towards
Watch any old American Wild West movie and
prefer the suburbs to the city where the SUV’s
the unstintingly popular
the imagery is always the same; a rugged terrain
size never looks out of place.
SUV is, however, being
with a horse-drawn covered wagon carrying Ma,
SUVs also fit-in perfectly with the American
boosted by such aspects
“drive-through” culture, where drivers can do
as its individuality and
Now digitally substitute that rickety covered
everything from picking-up lunch, to ordering a
comprehensive equip-
wagon for a modern-day sport utility vehicle, and
decaf mocha latte, to collecting dry cleaning and
ment. The sport utility
right there is much of the reason for America’s
extracting cash from an ATM. All without leaving
vehicle is moreover the
enduring love affair with the SUV.
the leather-lined, air conditioned, 14 cupholder
ideal family car that often
cocoon of their sport ute.
clocks up hundreds of
Pa and the three kids “Out West”.
Ever since those pioneering Wild West days,
Americans have cherished personal freedom,
And who wouldn’t want to drive a vehicle that
mobility, rugged individualism and a little adven-
provides the best safety and security for their
excursion. For many
ture.
loved ones inside?
Americans, the choice
Even today, American families don’t think twice
You can bet that if John Wayne were alive to-
about loading up their SUV with a mountain of
day, he’d be driving an SUV. And the bigger the
camping gear, hooking a boat trailer to its tow
better.
hitch, and taking an 800 km “road trip” to some
remote camp ground. For a weekend.
And from Monday to Friday, only a vehicle the
size of a hulking, seven-seat SUV can cope with
the daily frenzy of ferrying kids to school, to
74
AUDI 2006 ANNUAL REPORT
kilometres on a weekend
is an obvious one: the
bigger, the better!
PHOTO: PATRICK MOLNAR/GETTY IMAGES
USA: freedom XXL
SOCIETY: INTERNATIONAL CAR TRENDS
The cars that
China wants
China: waiting patiently and taking
tea. Letting everything flow
occasion.
Does it have a DVD
Martin Kühl is a journalist and Sinologist.
It is said that the Chinese only ever look
player? Will I be able to
Together with his wife Christiane Kühl, he
forwards – and nowhere is this maxim truer than
connect up my iPod?
established the journalism office karma-
on the roads. Chinese drivers make a bee-line for
How powerful is the air
news in Beijing at the start of 2000. Martin
whatever gap they have spotted in the traffic,
conditioning? These are
Kühl reports from China for such media as Focus,
glancing neither sideways nor in the rearview
the questions that sales
Financial Times Deutschland and Welt am Sonntag.
mirror. This stubborn focus on what lies ahead is
one of the things that makes the traffic seem so
executives even of com-
perilous to a Western passenger. Upon closer
pact cars have to deal
PHOTO: TIM MC CONVILLE/CORBIS
a business car acquires the status of a social
with. Expectations are
White and silver: these are the colours of inde-
observation, however, it becomes apparent that
rising along with the
pendence on China’s roads. Anyone who can
chaos and aggression are conspicuous by their
range on the market, par-
afford it will emphasise their status as a private
absence. Everything flows in China.
ticularly when it comes
individual with a gleaming, light-coloured car,
If you nevertheless encounter traffic conges-
to interior equipment.
in stark contrast to the black that is associated
tion in this land of flow, it is down to “yuanfen” –
Because equipment is
with state apparatchiks. For decades, imposing
divine providence. The Chinese know that get-
particularly important to
limousines with tinted or even taped-over win-
ting hot under the collar will not change any-
the Chinese – often more
dows seemed to be the norm on the roads of
thing. Even when events are happening thick
so than the technology
Beijing and Shanghai. Black and status-laden,
and fast, calmness counts for much in the coun-
under the bonnet. Around
with an extra-long wheelbase, they singled out
try known poetically as the “Middle Kingdom”. In
three-quarters of Chinese
their occupants as high-ranking government
a country where sleeping in public is regarded as
car buyers are investing
officials or the bosses of a state-run company.
proof of competence, the chauffeur-driven busi-
For businessman and party member alike, the
nessman leans back in his ultra-soft seats while
And as yet, they have little
car is unquestionably a four-wheeled status
his driver opens his thermos flask. You wait, take
experience of brands,
symbol. Business meetings commonly involve
tea and recuperate – until the even flow begins
service and technical
one party picking up the other – not that either
again. In China’s metropolises, you know that
reliability.
of them has to do any of the driving. A trip in
forward is the only direction to go.
in their very first car.
AUDI 2006 ANNUAL REPORT
75
SOCIETY: AUDI SUPPORTING BRAZILIAN CHILDREN
Learning
to win
“Educação pelo Esporte”: in conjunction
with the Ayrton Senna Foundation, Audi has
been staging the Education through Sport
project in Brazil since 1996. It is creating new
prospects for youngsters from socially disadvantaged families. Text Kristina Michahelles // Photos Renan Cepeda
76
Eight-year-old Gilmar Ferreira da Cruz
the outskirts of Rio de Janeiro, where
was utterly unable to kick a ball when
greenery is gradually being swamped
he joined Projeto Alegria, or “Project
by grubby shades of grey and brown,
Fun”, one of the projects within the
and street crime is on the increase. The
scope of the “Educação pelo Esporte”
district has a population of almost one
(Education through Sport) programme,
million, many of them families often
at the start of 2006. He was aggressive,
having to get by on less than 100 euros
negative and had motor difficulties.
a month.
Sporting competition helps children
with their personal and social development.
A warm meal is part of the deal.
His father had walked out on the fami-
The children can attend either of the
ly many years before. Gilmar has now
two sessions which take place in the
developed into one of the children who
morning and afternoon at the campus
explain the game’s rules to others. “I
of the Federal University of Rio de
love being here”, he says with pride.
Janeiro and indulge in all kinds of
His dream? To become a footballer.
sport under the watchful eye of quali-
And his biggest wish? To own a
fied instructors. Football, competitive
a partnership with the Ayrton Senna
remote-controlled toy car.
running,
basketball,
Foundation in 1996. Thanks to spend-
Gilmar has just arrived along with
wrestling, and yet more football. And
ing around 10 million reais (about 3.6
about one hundred other children.
between activities, a meal break in the
million euros), the programme “Educa-
Hailing from the surrounding poor dis-
canteen. For many of the children, it is
ção pelo Esporte” has already enabled
tricts, they all go to school in the after-
their first meal of the day. Then there is
80,000 children and young people
noon. To avoid having to stay at home
time for some painting, craft activities
between the ages of eight and 18 to
in their confined shanties and spend
and reading. Four hours later, it is time
discover an alternative to their con-
their time watching TV while their par-
to go home.
fined living conditions in the various
relay
races,
projects.
ents or even grandparents are working
The same pattern is being repeated
in order to feed the family, they can
simultaneously in almost every federal
It all started one year after the
play sport three mornings a week.
state in Brazil: around 11,000 children
tragic death of the famous Brazilian
Everything is neat and tidy between
are being taught recreational activities
Formula 1 racing driver. “If we want to
the light-painted walls. A large, shady
and sports by 510 instructors at 16 dif-
change things, we have to start with
mango tree and palm trees border the
ferent universities. The project at Uni
children,” Ayrton Senna was wont to
freshly mown pitch – a veritable oasis
Mato Grosso is now attended by al-
say. His sister Viviane, who has been in
in the poor Duque de Caxias suburb on
most 5,000 children. Audi entered into
charge of the foundation named after
AUDI 2006 ANNUAL REPORT
“Project Fun” also means the aspiration
of escaping from the clutches of poverty.
The group gives the children security.
gateway to personal and social devel-
The “Educação pelo Esporte” project
opment. The universities provide the
has now been running for ten years,
facilities and the teaching staff, and
and it is successful: a report from 2003
the Senna Foundation trains them and
found that children and youths who
coordinates the annual exchange of
had taken part in the various projects
findings. There are 1.3 million children
performed
with no schooling in Brazil. Around
school.
above
the
average
at
three million children have to work.
To mark the partnership between
According to official statistics, approx-
Audi and the Senna Foundation, the
imately half a million young people
otherwise modest Viviane Senna now
aged between 15 and 24 in São Paulo
has one big ambition: to roll out the
alone did not finish primary school.
programme on a nationwide scale via
The number of street children is rising
the Brazilian Ministry of Sport. Viviane
by the year – children and youths who
Senna explains how the expertise has
her brother since 1994, took him at his
are exposed to poverty, homelessness,
now been trialled over many years and
word. At the University of São Paulo,
violence, drug abuse and discrimina-
how the formula could work perfectly
where Senna used to go jogging, she
tion.
well on a large scale. And her most
discovered a project that aimed to
For Viviane Senna, that is the crux
memorable moment over the past ten
bring about social change through
of the whole programme: helping
years? “When a 14-year-old boy who
sport.
children to live with the financial and
used to be working for the drugs boss-
Audi, at that time venturing into
social circumstances of their families,
es in the slums said to me: ‘There’s one
Brazil for the first time, was looking for
to overcome conflicts and barriers,
thing I find here, and nowhere else: the
an appropriate means of becoming in-
and to be able to take decisions within
opportunity to survive’”.
volved in social activities on top of its
that context. “I never cease to be im-
business operations. The partnership
pressed at how efficiently children
with the Senna Foundation soon
make the transition. The project isn’t
Kristina Michahelles is a freelance
meant that the programme developed
some wishful thinking divorced from
journalist and translator focusing
at São Paulo University could be ex-
reality; it is an opportunity for change.
on business and the environment.
tended to 16 different universities
Whatever they do later in life, they quite
throughout the entire country.
simply learn what it is like to win,” says
television stations and news magazines, and
the Formula 1 driver’s sister.
lives in Rio de Janeiro.
The basic idea was to use sport as a
She works for daily newspapers,
AUDI 2006 ANNUAL REPORT
77
SOCIETY: NETWORKED WORKING
Lower costs
create higher quality
Car manufacturers and suppliers are inextricably linked.
The one cannot function without the other. Nevertheless, the
relationship is not always easy. Is it possible to supply
consistently high quality at ever lower prices?
Interview Eric Felber // Photos Jens Neumann
Discussing the details:
Ulf Berkenhagen
(left) and Dr. Rolf
Breidenbach
“If a supplier does not improve its cost
situation every year and does not develop new
technologies and new product features every
year, it will become unattractive to a customer
such as Audi.” Dr. Rolf Breidenbach
C
utting your costs can also be a way of
higher than elsewhere. That’s something we
boosting quality: this conclusion, at first
won’t be able to alter significantly. The important
glance a rather surprising one, is shared
thing is that we offer advanced technologies
by Ulf Berkenhagen, Member of the Board of
here in Germany. The things that we are capable
Management of AUDI AG for Purchasing, and
of doing best in Germany are the things we
Dr. Rolf Breidenbach, Managing Director of the
should be doing here. We’ll have to do every-
supplier Hella KGaA Hueck & Co., based in Lipp-
thing else in other countries. That will result in a
stadt. A discussion of Germany as a manufactur-
Ulf Berkenhagen (born
ing location, quality capability, cost efficiency
1961) has been Member
competitive network.
and playing by the rules of the game.
of the Board of Manage-
What exactly are those things that you have to
ment with responsibility
be doing in other countries?
The debate surrounding the competitiveness of
for Purchasing at AUDI AG
BREIDENBACH: Simple manual activities, for
Germany as a manufacturing location continues.
since October 1, 2006. He
example. It is now getting very difficult to
Hella and Audi are companies which both have
joined Volkswagen AG in
base such operations in Germany. At Hella, we
their headquarters in Germany. Is it really such a
1977. After completing vo-
control our worldwide network from compe-
bad place to be based as is often made out?
cational training as an in-
tence centres here in Germany. They are respon-
BREIDENBACH: No, definitely not! Germany has
dustrial business manage-
sible for both development and production. Let’s
its advantages and disadvantages as an indus-
ment assistant and obtain-
use the example of the development process
trial manufacturing location. What we need to do
ing a degree in Business
for a vehicle component. That process is coordi-
is exploit its advantages and compensate for its
Administration while con-
nated by the competence centre and broken
disadvantages. One of the really big plus points
tinuing with his career, he
down into individual steps. Whereas scopes that
is the expertise of the workforce here. The crucial
held senior positions with-
are critical for competitive differentiation are
issue will be how to link the existing potential
in Volkswagen Purchasing.
handled in Germany, the detail tasks can be
of the workforce with the development of inno-
He was appointed Head of
performed equally well in China, India or Eastern
vations in Germany and then implement it in new
Purchasing at SEAT, S.A.
Europe.
products. I believe that suppliers and car manu-
in 1996. Between 2000 and
facturers alike are very well equipped in this
2006, Berkenhagen was
And how does a supplier manage to be
respect.
Head of Group Purchasing
competitive?
BERKENHAGEN: I agree entirely. The debate
for Electrics/Electronics.
BREIDENBACH: A supplier will only be competitive as part of a worldwide network. That can’t be
about Germany as a manufacturing location is
too one-dimensional for my liking. Both Hella
Dr.-Ing. Rolf Breidenbach
achieved without a corresponding distribution
and Audi are companies that feel a huge respon-
has been Managing
of roles. And nothing is worse than treading wa-
sibility and commitment to Germany and to the
Director of Hella KGaA
ter. In other words, we have to keep improving all
employees that they have here. “German engi-
Hueck & Co. in Lippstadt
the time. If a supplier does not improve its cost
neering” is still admired all over the world.
since 2004. A native of
situation every year and does not develop new
Though pinning our faith on “Made in Germany”
Bochum (born 1963), he
technologies and new product features every
alone would lead us up a blind alley. When all is
studied Mechanical
year, it will become unattractive to a customer
said and done, we need to ensure that it is still
Engineering and Econom-
such as Audi.
possible to manufacture goods profitably in our
ics at the RWTH Aachen
country. So it is imperative to also keep expand-
University of Technology,
So what are the roles of the Purchasing Depart-
ing our international network. We need to com-
taking his doctorate in
ment and the supplier in this network?
bine the potential of Germany as an industrial
Engineering in 1991. He
BERKENHAGEN: There is still a tendency to re-
base with production locations all over the
subsequently held various
duce the matter to a transaction solely between
world. That will ultimately enable us to offer our
senior posts in industry
a car manufacturer’s Purchasing Department
customers attractive products of superlative
and at a technical service
and the supplier. That has long ceased to be the
quality and at competitive costs.
provider. Before joining
case. If a Purchasing Department wants to be
Hella, Breidenbach worked
successful, it must link up with the company’s
And what framework conditions need to be met
for the management
Technical Development, Quality Assurance, Pro-
in Germany for that to happen?
consultants McKinsey.
duction and Logistics areas in such a way that it
BREIDENBACH: I believe focusing the debate on
can take decisions that are equally valid for the
framework conditions takes us in the wrong
entire company. At Audi, that means specifically
direction. The bottom line is: that is the context
that Purchasing has to satisfy very high technical
we are operating in, and that is what we have to
standards – the same standards that are epito-
live with. The question is simply how we go
mised by the brand claim “Vorsprung durch
about it. There is for instance no getting around
Technik”, in fact. We naturally expect those same
the fact that the factor costs in Germany are
standards from our suppliers. After all, the
AUDI 2006 ANNUAL REPORT
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79
SOCIETY: NETWORKED WORKING
parts, components and systems that we buy in
Hella KGaA Hueck & Co.
That doesn’t exactly sound like partnership …
have to be of the right calibre for premium-brand
The automotive supplier
BERKENHAGEN: But it is! This pressure helps the
vehicles in every respect.
from Lippstadt develops
supplier as well as us. As Dr. Breidenbach said
and manufactures com-
earlier, nothing is worse than treading water. Of
What does that mean specifically?
ponents and systems for
course we’ll get into the odd argument about
BERKENHAGEN: It specifically means that we are
lighting technology and
whether a price is appropriate, amid the fre-
constantly doing a precarious balancing act. Be-
electronics. In addition,
quently misunderstood and much debated issue
cause we cannot afford to take decisions solely
it produces complete
of global sourcing. That’s part of the business.
on commercial grounds; we also have to ensure
vehicle modules, air con-
But when you consider what standard of quality
that all other criteria, such as our company’s
ditioning systems and on-
we are now achieving with it, you realise that fair-
quality expectations, are met. We ultimately
board networks via joint-
ness and tough bargaining actually go together.
can’t afford to enter into a debate with our
venture companies. Hella
customers on whether one or two faults on a car
has one of the world's
Any objections, Dr. Breidenbach?
are still permissible. Our customers expect
biggest trading organisa-
BREIDENBACH: No, not at all. The important
zero faults from us – and quite rightly so. It is
tions for automotive parts
thing for me is that if you assume each party sees
therefore only logical for us to demand the same
and accessories. The
matters from a different viewpoint, you have to
zero-fault quality from our suppliers. We will
group posted revenue of
lay down clear rules of the game that both sides
consequently have to operate as a network
EUR 3.4 billion in the
then have to adhere to. By abiding by the rules of
to a much greater extent in future than has
2005/2006 financial year.
the game, we can then treat each other fairly but
previously been the case – both within our own
Hella is among the top 50
also harshly if necessary. A lengthy partnership
divisions and of course with our suppliers. We
automotive suppliers in
will only come about if both parties get along
want to integrate our suppliers even more
the world, and one of
well in the prevailing circumstances. I as a sup-
deeply into the product development process,
Germany's top 100 indus-
plier can for instance insist on protecting my ex-
as a way of engendering the mutual trust that
trial companies. It em-
pertise. In return, I keep to the cost reductions
will enable us to create vehicles for which there
ploys over 24,000 people
agreed with Mr. Berkenhagen.
is a market.
worldwide at 70 production plants, production
Mr. Berkenhagen, how do the Purchasing
That sounds like a challenge, Dr. Breidenbach …
subsidiaries and joint
Department at Audi and the supplier ensure that
BREIDENBACH: Yes, but a challenge that we’ll
ventures. Hella's cus-
both costs and quality meet the customer’s
willingly rise to.
tomers include all leading
expectations?
car and systems manu-
BERKENHAGEN: My general experience is that if
It sounds like you’re all yearning to live in
facturers, as well as the
you have suppliers that are having to tackle
harmony and partnership. But the relationship
automotive parts trade.
problems of cost, there are often also quality
between manufacturer and supplier has not
BERKENHAGEN: To a great extent we agree early
“Our customers
expect zero
faults from
us – and
quite rightly
so. It is
therefore
only logical
for us to
demand the
same zerofault quality
from our
suppliers.”
on in the process on how we determine produc-
Ulf Berkenhagen
always been easy and without its tensions. How
do you propose to flesh out the abstract idea of
“partnership”?
BERKENHAGEN: Well, to use a mathematical
analogy, let’s say that for Dr. Breidenbach two
and two makes five, and for me it makes three.
That’s the philosophical difference between our
professions. Looking at things as partners, on
the other hand, the challenge is to achieve
economical results with a sense of proportion.
Particularly when we are talking about such a
complex product as a headlight.
How exactly does that work?
problems somewhere along the line. On the
other hand, if you have a partner in the supply
industry that has got its costs under control, the
quality of its products often also rises.
Wait a minute, many people regard the drive to
cut costs at the supplier as undermining quality.
Now you’re saying precisely the opposite is the
case.
BERKENHAGEN: That’s how it is. If a supplier implements stable, reproducible processes, it also
means for example that they produce less
waste. Less waste in turn means lower costs for
the supplier and higher quality for us. That’s
grossly over-simplified, but basically what it
boils down to.
BREIDENBACH: I couldn’t agree more with what
tivities. This ensures that the supplier, too, is
Mr. Berkenhagen has just said. There’s absolute-
constantly working on its processes. Only if it
ly no contradiction between low costs and top
does so will we be able to meet the entrepre-
quality. Even if it’s often argued that there is. The
neurial requirements successfully and optimise
attributes of a low-cost, simple solution for a
real costs.
component, for instance, will almost always
80
AUDI 2006 ANNUAL REPORT
And how does a supplier become so “qualityenabled” that they can leap through that hoop?
BREIDENBACH: By making top quality the core
aspect of their corporate strategy. That’s something that has to be drummed into the employees. Missing quality targets has to have the same
consequences as missing financial targets.
BERKENHAGEN: Quality is a “must”, whether at
Audi or at all our partners. You can’t afford to underestimate the importance of parts that are
worth ten cents, compared with parts that cost
100 euros or more. If a basic screw in an assembly costing several thousand euros causes it to
malfunction, the damage can be immense. So
the same quality standards always have to be applied to all parts. There’s simply no other option.
It looks as if suppliers will be facing some hard
times. Will that result in further consolidation
among automotive suppliers? Will smaller manufacturers actually be able to survive?
BREIDENBACH: I wouldn’t exactly say that we
are facing “hard times”. Suppliers have had to
contend with intensive competition for many
years now. That actually introduces a bit of spice
into our lives. I believe that there is ample potential even for smaller suppliers to survive.
And how can car manufacturers and suppliers
be successful by joining forces?
BREIDENBACH: As well as laying down and adhering to the rules of the game, above all we
should make sure that our expectations tally, for
instance regarding the development of new
technologies. By that I mean that suppliers and
include superior quality. In this connection, Hella
Tough negotiations help
to yield good results.
OEMs should draw up a kind of “roadmap” for
future technological developments over a longer
period.
is pursuing the “2ppm strategy” (two parts per
BERKENHAGEN: That brings me back to the
million). That means that by 2012, we are aiming
for a rate of just two faulty parts per million com-
The Purchasing Depart-
notion of partnership. You can legitimately
ponents shipped. We are currently halving our
ment at AUDI AG has a
compare it to a partnership in private life. Both
fault rate every year. And we are finding that the
staff of around 400,
partners constantly have to keep working at it.
subsidiaries
procuring materials for
Specifically in the case of car manufacturers and
progress in quality are the ones with the best
the entire company,
suppliers, I like to describe it as a form of con-
cost structure.
from pencils to brake
structive conflict management. By tackling these
BERKENHAGEN: It’s really quite straightforward.
callipers. It uses a pool of
conflicts jointly, you lay the foundations for a
The next step that we at Audi expect a supplier to
around 4,400 suppliers.
lengthy, trusting, successful partnership.
do is safeguard their acquired quality capability
The purchasing volume
in the long term. We scrutinise that very closely.
in the 2006 financial year
Whenever we nominate a supplier, it is more
was in the order of EUR
than just a unilateral decision by our procure-
14.6 billion. Of this total,
ment people; it is also influenced by the Techni-
the procurement of ma-
cal Development, Quality Assurance, Production
terials for the construc-
and Logistics departments. And we will be set-
tion of vehicles accounted
ting the standard even higher in future.
for some EUR 12.7 billion.
that
are
making
the
biggest
AUDI 2006 ANNUAL REPORT
81
SOCIETY: LEBENSHILFE INGOLSTADT
Where aid makes economic sense
Workshops for the disabled in Ingolstadt
Left to right: Petra Ekert,
Hubert Geß (Technical Director
of the Lebenshilfe workshops,
Ingolstadt), Christa Stewens
(Bavarian Welfare Minister),
Stephan Grühsem (Head
of Audi Communication),
Prof. Dr. Martin Winterkorn,
Peter Mosch (Chairman of
the General Works Council of
AUDI AG), Dr. Alfred Lehmann
(Mayor of Ingolstadt).
82
September 6th, 2006
Christa Stewens and Peter Mosch like-
controlled screwing stations and deliv-
Venue: the Lebenshilfe workshop for
wise try out swapping roles with the
ered just in time to the Audi production
the disabled, Ingolstadt. “You pull the
machinist and add their praise of the
halls. Some 10,000 gear lever trims are
gear lever knob through the leather
well-structured working processes.
in addition sewn and assembled each
gaiter and place it on the press here.”
When touring the Lebenshilfe work-
The arm of the device is lowered, and
shops, one thing becomes clear to the
with a clunk the two parts are pressed
visitors: every single worker is highly
November 15th, 2006
together. Petra Ekert proudly presents
motivated, one hundred percent com-
Petra Ekert is excited. Expectantly, she
the assembled gear knob assembly to
mitted and performs top-quality work.
and twelve colleagues take their seats in
her visitors, her eyes sparkling with
Franz Penzenstadler, who is assem-
the AUDI AG film theatre. Today is a spe-
delight. Today is a special day for the
bling shock absorbers for the Audi A4,
cial day for her – and for Audi, her host.
713 workers at the Lebenshilfe work-
proudly explains that the establish-
Three delegations from the Lebenshilfe
shops in Ingolstadt. Bavaria’s Welfare
ment has received top ratings from
workshops are paying a return visit to
Minister Christa Stewens, Audi boss
Audi for its logistics and quality. This
Audi. Plant Manager Frank Dreves
Prof. Dr. Martin Winterkorn (until De-
places the Lebenshilfe workshops
(Audi Member of the Board of Manage-
cember 31, 2006) and Chairman of
among those suppliers capable of
ment for Production since February 1,
Audi’s General Works Council Peter
satisfying the most exacting quality
2007) greets his visitors in person.
Mosch are visiting the establishment to
requirements set by Audi.
week for the Audi A3, A4 and A6 models.
Audi’s association with Lebenshilfe
witness at first hand in a tour of the
“Forum Soziales Bayern”. Now it’s the
dates back to the establishment of the
factory how the shock absorbers are
turn of Audi’s Board Chairman to take a
latter in Ingolstadt in 1979, and it sup-
installed on the car, how the gear lever
place at the machine, with Petra Ekert
ports this partnership with donations
trims are fitted, and how the compo-
looking over his shoulder and following
by the workforce. The three workshops
nents that they have machined are
every movement of the experienced
in and around Ingolstadt offer disabled
transformed into a car! And yet again,
engineer, while interjecting how impor-
people a differentiated working envi-
Petra Ekert’s eyes are gleaming. She is
tant it is to have the knob aligned prop-
ronment that can accommodate their
looking forward to tomorrow – and her
erly. She is clearly delighted as Winter-
individual levels of disability. Audi is
work at the Lebenshilfe workshops. A
korn applies his autograph to the fin-
the largest customer, providing indus-
reliable supplier for Audi, a depend-
ished gear knob assembly and presents
trial assembly work for 450 employees.
able source of work for the Lebenshilfe
it to her. “You are doing a tremendous
Around 14,000 shock absorbers for the
workshops: the perfect ingredients of
job!”, he remarks after his “induction”.
Audi A4 are assembled at computer-
a successful partnership.
AUDI 2006 ANNUAL REPORT
PHOTO: AUDI
At last they have the opportunity to
launch the “Role Reversal” initiative of
SOCIETY: IN BRIEF
Bavarian Order
of Merit
100 years of car
manufacturing in
Neckarsulm
Support for
Elton John’s
Aids charity
(2nd from
right).
Visitors to the Neckarsulm plant’s open day at
the end of September 2006 were able to witness
the unique blend of tradition and innovation
sulm, the plant was open to the public for two
Elton John Aids
Foundation
represented by Audi at first hand. To celebrate
the 100th anniversary of car making at Neckardays, inviting visitors to take a journey through
The Elton John Aids Foundation is
Prof. Dr. Martin Winterkorn
the history of car production at Neckarsulm. As
one of the many projects that Audi is
has been awarded the
well as historic vehicle models, the current mod-
supporting as part of its extensive
Bavarian Order of Merit in
el range was on show, together with the Audi
social sponsorship activities. Audi
recognition of his social
R8* putting in its first appearance in Germany.
has now been sponsoring the “White
involvement in Bavaria.
Its production start at Neckarsulm was officially
Tie & Tiara Ball” and the Oscar View-
He thus joins the 1,795
marked at a ceremony attended by numerous
ing Event likewise organised by the
living recipients of the
invited guests, among them Baden-Württem-
pop star for the past five years. The
Order, of which there may
berg’s Prime Minister Günther Oettinger and
highlights in the accompanying
only be 2,000 at any given
football legend Franz Beckenbauer. The visitors
charity auctions this year included
time. Bavarian Prime
were treated to a colourful, varied programme
the new TT Coupé and the Audi Q7.
Minister Edmund Stoiber
illustrating the process of creating a car.
Between them they raised around
presented the white and
900,000 US dollars, which will go to
blue “Pour le mérite” in
HIV/Aids relief programmes.
person to Prof. Dr. Martin
Winterkorn at the Antiquarium of Munich’s
in brief:
Residenz Palace. Bavaria
fared well with two im-
society
portant decisions reached
in 2006: both the new
Audi A5 and the new Audi
Q5 will be built in Ingolstadt.
Past and present enticed numerous visitors to the
open day at the Neckarsulm plant.
Assisting with
papal visit
Audi supplied vehicles
for the visit of Pope
Benedict XVI to Bavaria.
Well qualified –
the 2006 intake
A new chapter in the lives of 682
young men and women began on
September 8, 2006: 453 of them
The vehicles used com-
started apprenticeships at Audi in In-
prised six of the A8 L W12
golstadt. A further 229 young people
quattro Security saloons
entered training at Neckarsulm. Audi
for the Pope, plus ten
provides training in 18 vocations in
further A8 saloons for the
Ingolstadt, and two young people
papal delegation.
embarked on an apprenticeship in a
new vocation: technical product designer. Their task will be to reconcile
the diverging wishes of design
studio, technology and workshop.
PHOTOS: AUDI
Following the successful completion
of their training, all apprentices can
expect to find secure jobs at Audi.
* fuel consumption figures at the end of the Annual Report
AUDI 2006 ANNUAL REPORT
83
SPORT: THE AUDI R10 TDI AT LE MANS
The longest day
24 hours to establish a landmark in motor racing history:
how a diesel car became the first of its breed to win the classic
endurance race. Text Herbert Völker // Photos Bodo Kräling
SPORT: THE AUDI R10 TDI AT LE MANS
A
s well as the starting numbers, the
all about sheer engine output and the durability
colours of the roll-over bars – seemingly
of the tyres. In the 1930s attention turned
mere elevations – help to differentiate
to exploiting compressor technology, and disc
the cars. Number 7, the yellow one, was proving
brakes made their first appearance at Le Mans
something of a headache, whereas Number 8,
in the 1950s. Aerodynamics began to play an
the red one, was running immaculately. So it
ever more prominent role from the 1960s on, and
came as something of a shock when Number 8
the emergence of monstrously large engines
pulled into the pit in the middle of the night,
prompted the introduction of clever rules which
making a horrible grumbling noise. A few mo-
sought to redress the balance in favour of social
ments of paralysed horror gave way to a lightning-
acceptability. Injection technology, engine man-
fast, clear-cut decision that triggered off a chor-
agement and new materials characterised the
eography executed with instinctive certainty.
next steps, and in the 1990s fuel consumption
Never before had it been necessary to perform a
acquired new significance.
delicate operation on this new car under the
The Le Mans organisers realised long before
pressure of a race situation. All the more amaz-
Formula 1 (which is now slowly beginning to
ing was the self-evidence with which the deci-
follow suit) that sooner or later it would be
sions, operations and hardware came together,
necessary to square the technical demands of
as if symbolising the component that lay at the
top-class motor racing with the ability to use fuel
heart of the matter: the gearbox’s gear train. No
efficiently. The appeal of the race was not to
hesitation, no unnecessary dialogue, no super-
be sacrificed in the process – but why should it,
fluous actions, no cumbersome parts – every-
indeed?
thing happened as calmly as if in a theory lesson.
Only competitors who complete the 24-hour
After eight minutes, the red one was back in ac-
race with a minimum of refuelling stops will have
tion, engendering – according to Head of Sport
a chance of overall victory in a very tight field.
Wolfgang Ullrich – a “wonderful feeling of re-
Modest use of fuel coupled with maximum effi-
lease, as if the worst was already behind us. We
ciency for attacking the racetrack emerged as a
had that tremendous feeling of being perfectly
key issue for designers and race engineers.
Top right: Emanuele Pirro
pulls into the pit to
refuel. A good perspective
to savour the elongated
beauty of the R10.
Bottom right:
raring to go. Tom
Kristensen ready for his
next stint in Number 7,
the “yellow” one.
in control – everyone working as a team.”
The whole affair showed that there are no
And so, to Le Mans.
special rules or benefits for those who venture
How can the unique challenge of this race best
into virgin territory. The utterly new and highly
be explained? One could resort to talking about
revolutionary TDI racing car did not have even
its legendary character, were the term not so
the slightest period of grace and was expected
over-used.
to bypass several decades of experience in conventional racing cars at a stroke.
Le Mans is a region, a city, a race and the experience of an incredible weekend. A quarter of a
Following on from the brand’s brilliant demon-
million spectators are spread across the country-
strations of the diesel principle’s acceptability in
side. The days are long, with the summer solstice
the guise of economical, refined, high-torque TDI
just a few days away.
engines, Audi now believed it was time to challenge the petrol engine in the racing domain,
too. There was a sense that history decreed that
it was only logical to become the first to venture
this step, in the form of works-backed activities
at the highest level.
Only the latest achievements in diesel technology have made it possible to stage a direct
contest, complying with that bare minimum of
technical requirements that is the norm in top
motor sport. For the occasion, Audi built a highperformance V12 biturbo TDI complying with
the displacement limit of 5.5 litres laid down by
the competition rules.
Destination “Le Mans” was no coincidence.
Le Mans has always served as a benchmark of
technical progress. In the very early days it was
86
AUDI 2006 ANNUAL REPORT
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The kiss of sunrise from
the east, refreshingly
early on this midsummer
morning. And a sign
that the race has reached
its half-way mark.
AUDI 2006 ANNUAL REPORT
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AUDI 2006 ANNUAL REPORT
SPORT: THE AUDI R10 TDI AT LE MANS
The rare sight of rain in
a blazing summer. The
drivers had to be prepared for everything during practice – and got
it. The weather remained
dry for the race itself.
Le Mans is also a motor racing event that
possesses one overriding quality: its enduring
ability to reinvent itself, while remaining a rock
of stability throughout. Amid all the various
directions that motor racing has taken, from the
pioneering to the misguided, the Le Mans 24
Hours stands out as a beacon of consistency.
Then there is its sheer length – that dinosaur
format of the 24-hour race. 24 hours – a notion
that used to be more reminiscent of the long,
measured pace of the marathon, the endurance
of clocking up lap after lap on the same circuit
and the rigours of extreme distance and incessant driving. Today, the endurance race in effect
consists of a large number of individual sprint
races adding up to almost 5,000 kilometres, the
Off duty, but not a hint of
easing up: Dindo Capello
(No. 7) and Emanuele Pirro
(No. 8) following events
on screen in the pit.
combined distance of over 15 Grand Prix races,
Left: the final step in a
perfectly choreographed
pit stop and handover.
Frank Biela jumps out,
having strapped Marco
Werner into his seat.
7,000 hard brake applications, 17,000 gear
among “endurance drivers with the hearts of
changes and eight million crankshaft revolu-
sprinters”, and all had previously driven for Audi:
tions – or thereabouts.
Number 7 with the Italian Dindo Capello, the
This is deadly serious motor sport, but it has
seven-times Le Mans winner Tom Kristensen from
taken the superstructure of the irrational to
Denmark, and the Scot Allan McNish. Number 8
make this such a glorious occasion. It is sheer
was manned by the two Germans Frank Biela and
madness, fuelled by the legends of the early
Marco Werner, and the Italian Emanuele Pirro.
years, readily available in all its modern guises.
Even if Tom Kristensen is the one dubbed “Mr Le
Le Mans is also about entertainment, an accre-
Mans”, there is so little to distinguish between
tion of show and rituals.
all six of them in terms of speed that the roles al-
Now that other endurance races have gradual-
located to each individual were easily carved up.
ly faded away, the Le Mans night comes across
In other words, who drives in qualifying, who the
as a rare, precious reminder of bygone years in
starting lap, and who crosses the finishing line?
the modern world of motor sport. The two Audi
R10 TDI cars were manned by the absolute elite
Of the team that emerged as the eventual
winners, Werner opted for the thrill of the
AUDI 2006 ANNUAL REPORT
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89
SPORT: THE AUDI R10 TDI AT LE MANS
“hot lap” for qualifying, Biela for the adrenalin
rush of the starting lap and Pirro for the honour
of the final “stint”, as it is known in racing parlance. According to the dictionary definition, a
stint is an “allocated task” or “shift”. At Le Mans,
a stint lasts as long as a tankful of fuel (90 litres)
allows. That normally means 12 laps, or about
three-quarters of an hour.
But the extra economy of the diesel principle
the rev counter in the display. The positive thing
meant that the Audi cars managed to stay out on
is that the low noise level is very agreeable over
the track for 14 laps at a time, saving four pit stops
long distances, so more relaxing for the driver.”
over the whole distance. In the race’s closing
phase, when it was possible to step off the pace
Fortune in the marathon.
a little, Tom Kristensen even managed to coax 16
A single moment of contact when overtaking a
laps out of a single tank of fuel. A sensational
straggler, a tyre puncture or even a tiny fault can
achievement, and a new benchmark for the future.
put you out of the race, however well you may be
The top speed at Le Mans is now roughly the
doing. As fate would have it, the yellow car (Num-
same for all top cars (335 km/h). It is intentional-
ber 7) was stricken with a litany of misfortunes
ly capped by the rules’ safety requirements and
necessitating four lengthy pit stops, followed by
the two chicanes on the long straight, where
an exhilarating chase that was finally rewarded
someone clocked up a fearsome 406 km/h 15
with third place in the final classification. Mean-
years ago. Gone are the days when sheer top
while the red car, apart from that horrible
speed was the be-all-and-end-all of this race.
moment in the middle of the night, clocked up
It is now more a question of what speed is
its laps unperturbed by all perils. Emanuele
driveable in every situation, and in the ordi-
Pirro, traditionally the man for that climactic mo-
nary business of racing it transpired that TDI-
ment, steered the all-conquering, unassailable
powered cars clocked up laps an average of two
Audi R10 over the finishing line. By that point,
seconds faster than the fastest petrol engine. On
Biela, Pirro and Werner had put four laps be-
that basis, the race could already have been con-
tween themselves and their nearest challenger.
sidered to be won, were it not for the incredible
An outpouring of emotions, a rapturous wel-
imponderables of Le Mans which can come into
come and a place in the history books: the tri-
play right up until the final lap.
umph by the diesel-powered Audi R10 has
One striking aspect of the diesel racing car
earned a prominent place in the annals of motor
caught the attention of the spectators in the
sport. This was a triumph for the whole team and
course of the long race: its low noise level. Put
the technicians in the background, and also a
differently, the R10 TDI is astonishingly quiet for
ringing endorsement of one particular idea: how
a 650 bhp racing car. The gears (there are only
to demonstrate trailblazing technology aptly at
five of them) are always changed at less than
major sporting events.
Left: Marco Werner fully
wired up – acoustically,
visually and above all
emotionally, while his
colleague out on the
track clinches victory.
Top: still time for a stylistic study of functional
beauty, putting the
air stream in its place at
330 km/h.
5,000 rpm, with the result that from moderate
speeds upwards the drivers hear nothing at all of
the engine, because the wind noise is louder.
Herbert Völker, who for many years has been
Frank Biela remarked: “That means you have to
editor-in-chief of the Austrian magazine
concentrate even more than usual when braking
Autorevue, loves the Le Mans 24 Hours for
from a very high speed. You used to be able to
its incredibly successful blend of sport and
gauge when to shift down by the noise, but now
show: “The old lady of motor racing is now in finer
it was absent. You have to concentrate more on
fettle than ever”.
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AUDI 2006 ANNUAL REPORT
Right: the result permitting, the teams love to
cross the finishing line in
pairs at Le Mans. Biela,
Pirro and Werner (No. 8)
are the winners, Capello,
Kristensen and McNish
are third. Then it’s time
for the fans to take over.
AUDI 2006 ANNUAL REPORT
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AUDI 2006 ANNUAL REPORT
SPORT: AN AUTOMOTIVE ARISTOCRAT IN THE LAND OF THE BULL
The
return
of a
legend
The Lamborghini
“Murciélago” owes its
name to a particularly
brave Andalusian fighting
bull. He helped the
Miura family of breeders
to secure the fame from
which the car manufacturer, too, subsequently
benefited. Time for
an encounter between
bestial and mechanical
primeval power in the
land of the bull.
An encounter described
in the book “Lamborghini.
A tempo furioso”.
Text Stephan Grühsem/Dirk Maxeiner //
Photos Peter Vann
Common heritage:
Andalusian Miura bulls and their first
encounter with the Lamborghini Murciélago
LP640 Coupé*.
* fuel consumption figures at the end of the Annual Report
AUDI 2006 ANNUAL REPORT
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SPORT: AN AUTOMOTIVE ARISTOCRAT IN THE LAND OF THE BULL
T
he Lamborghini Murciélago carries us along old country roads
along
the
Rio
Guadalquivir,
towards Córdoba. The river brings life to
Andalusia’s expansive, arid landscape.
Traffic trickles along like the final few
drops in a bottle of Osborne sherry. The
twelve-cylinder engine booms out its
symphony for our ears only. Every gear
change sets the skin tingling.
The sheer bestial power of the
Lamborghini seems appropriate in this
harsh country. The Murciélago owes its
name to a particularly brave fighting
bull that wrote history in the bullfighting world on October 5, 1879. After the
noble and courageous beast had engaged the torero in a drawn-out struggle, the crowd in Córdoba asked for
the animal’s life to be spared – a rare
gesture indeed. After the fight, the bull
passed into the ownership of the bull
breeder Antonio Miura, who made it the
progenitor of a legendary breed of fighting bulls.
Sun-bleached bull’s skulls leading
the way
The gateway to the realm of the Miuras
is to be found on a lonely road, a couple
of kilometres from Lora del Río. It consists of simple wooden posts supporting two sun-bleached bull’s skulls and
the name “Miura” spelled out in sticks.
A weathered milestone displays the
letter “A”, adorned with two symbolic
horns – the Miuras’ coat of arms.
“Zahariche” is the name of the estate
Three generations of a legendary family of
breeders: (from left) Eduardo Miura, his son
Eduardo and brother Antonio, with the
painted tiles above them depicting grandfather Antonio in the saddle.
hidden well behind it. The Miuras, a dynasty of bull breeders, have been living
here since 1842 and have earned a place
Spanish riding boots with jangling
breeding, warning us not even to think
in the heart of every Spaniard. The name
spurs. Saddled horses are tethered to a
of getting out: “You should be under no
Miura is uttered with immense respect.
fig tree. The brothers have regularly
illusions, a three year old novillo can
Only once before has a Lamborghini
been riding since the age of five. The
already be very dangerous to a man.”
visited here – and that time, it was
sound of hooves thunders over from a
We pass a small arena (“tentadero”) in
driven by the boss himself. Ferruccio
group of riders dashing across the vast
which tests for selected animals are be-
Lamborghini called in on Eduardo Miura
meadow at a gallop.
ing held. One particular iron rule applies
Fernández in the 1960s. The outcome of
“Vaqueros” is the name given to these
here: a man should never approach a
his visit was a legendary name in the
Andalusian cowboys. They sit proud
designated fighting bull on foot (as the
motoring world: Lamborghini Miura.
and upright in their saddles, bearing
torero will subsequently do), with a
at
wooden lances. In such surroundings,
capa or muleta. “A bull,” explains Miura,
Zahariche is run by his sons Eduardo
our Murciélago LP640 Coupé* really does
“learns more in 20 minutes than a man
and Antonio Miura. There are many
look like a visitor from another planet.
does in his entire life”. A bull that has
Today,
the
family
business
hundreds of adolescent bulls, oxen,
Eduardo Miura invites us to climb into
already worked out the rules of engage-
cows and calves grazing more than
his battered old off-road vehicle and
ment would trample any torero into the
600 hectares of land. The Miuras wear
join him on a beginner’s course in bull-
ground straight away. At the age of four,
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AUDI 2006 ANNUAL REPORT
Discreetly understated: the Lamborghini waiting patiently for its next drive.
“A bull learns more in 20 minutes
than a man does in his entire life.”
the fighting bulls are fully mature and
tip the scales at between 600 and 700
kilograms of unbridled fighting spirit.
Eduardo Miura carefully eyes up a
group of four year old bulls standing
some distance away on a hill. Motionless and with their heads slightly
raised, they stare down at us. “One of
them doesn’t like my car,” explains
Miura. “It nearly pushed it over once
before and knows how to do it.” Miura,
however, seems more concerned about
The Miura family, based
at the “Zahariche” estate,
built its success in bullbreeding on the fighting
bull Murciélago.
* fuel consumption figures at the end of the Annual Report
his bull than about his pick-up truck.
Anything happening to the former
would be far more costly than just damaged bodywork. Even the slight-
AUDI 2006 ANNUAL REPORT
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95
“The truly brave bull gives no warning before it attacks.” Ernest Hemingway
The Andalusian bull-rearing dynasty meets its aristocratic offshoot:
the Miuras and the Murciélago.
96
AUDI 2006 ANNUAL REPORT
SPORT: AN AUTOMOTIVE ARISTOCRAT IN THE LAND OF THE BULL
“Aficion” in the air –
everything here is imbued with
a passion for bull-breeding.
Vaquero meets high-tech:
a clash of worlds.
est changes to the accustomed surroundings, noises, smells and movements could trigger off certain reflexes
and motor responses that this particular visitor is not keen on witnessing.
“The truly brave bull gives no warning
“Faced with a choice
between existence
and non-existence,
the bull would choose
to remain precisely
what it is.”
Picasso, another famous Andalusian,
used this world to portray eternal
topics such as love, war and death.
Countless artists and authors have felt
the irresistible pull of aficion. Without
bull-breeding, the Andalusia of natural,
uncultivated meadowlands would dis-
before it attacks,” wrote Ernest Heming-
appear along with the culture of the
way, “except that it keeps its eyes firmly
fixed on its foe, the ridge of muscles in
are clear: nobody is to move or make a
vaqueros. “I venture to assert that if
the neck swells up, one ear twitches and
sound, or even so much as sneeze. Then
faced with a choice between existence
it lifts its tail while it attacks.”
brother Antonio Miura rides with his
and non-existence the bull, such a won-
vaqueros towards the herd, to edge the
derful emblem of vital energy ever since
“Toro sentido” and the spirit of evil
animals very carefully into the photo-
the days of ancient Crete, would choose
The worst are the “toro sentido” or
grapher’s field of view. Antonio Miura
to remain precisely what it is,” writes
“Barrabás”, which are believed to be the
is a talented horseman and exudes a
the author Mario Vargas Llosa.
embodiment of evil. These four- or five-
casualness that evidently calms even
year-old animals have gained experi-
the bulls. The bulls evidently do not take
ence of fighting other bulls, and have
the Murciélago to be one of their kind,
become mistrusting and sly. “A ‘manso
sparing us the most expensive turf war
de sentido’, such as is often encountered
of all time.
at Miura, is the most dangerous animal
We are welcomed back to the house
imaginable,” states the book “Aficion”,
with an Andalusian meal prepared by
The appeal of the
which means literally “affection” – in the
the wives Christina Miura and Maria del
Lamborghini brand is
narrower sense, “for bulls”.
Mar Miura. The stuffed heads of famous
evoked in the book
For our photo shoots we drive the
bulls stare down at us from the walls of
“Lamborghini.
Murciélago LP640 Coupé* into the
the large hall. Certificates, posters of
A tempo furioso” by
middle of the meadow (Eduardo Miura’s
fighting bulls, paintings, photos and
Stephan Grühsem
enquiry as to the Lamborghini’s price
artefacts tell the fascinating story of the
seeming to extend his concern beyond
Miura dynasty. “This isn’t a museum,”
177-page illustrated book is published by
his bulls). The Lamborghini is first
explains Christina Miura, “It’s our life.“
Motorsport Verlag, ISBN-13: 978-3613025547.
parked on the meadow, then we all have
Aficion permeates the very air that you
It contains extensive articles on the history
to retreat behind a fence. The directives
breathe here.
and philosophy of the brand with the bull.
* fuel consumption figures at the end of the Annual Report
and Peter Vann. This
AUDI 2006 ANNUAL REPORT
97
in brief:
sport
Hamilton
Island Race
Australia’s Whitsunday Islands offered
the perfect surroundings for duels on
both land and sea in August 2006.
Steering a successful course in the
Audi Q7: Uli Hoeneß
More than 150 yachts steered a course
for a regatta win in the Hamilton Island
Bayern Munich on ice
Race, now in its 23rd year. As the offi-
Bayern Munich’s players found themselves on unaccustomed terrain in the
competitors at the airport venue en-
run-up to the 66th Hahnenkamm Race in January 2006 in Kitzbühel. At the
joyed a race-course atmosphere and
Audi Driving Experience, they were given an opportunity to put the Audi range
also supplied the Regatta’s top prize:
of models with quattro permanent four-wheel drive to the test under expert
an Audi A4 Avant. The keys to the vehi-
guidance. Together with General Manager Uli Hoeneß, players Oliver Kahn,
cle were presented to Australian Dave
Michael Ballack, Roy Makaay and their team colleagues first accomplished
Short, who secured a victory in both
a slalom course and dexterity road tests. Then Le Mans record-breaker Tom
the yacht race and the “Audi Final Chal-
Kristensen and 2004 DTM Champion Mattias Ekström showed the football
lenge” on the road. Audi will attend the
stars how to drive Audi cars both safely and sportily.
Hamilton Island Race for the first time
cial car partner, Audi ensured that
as main sponsor in 2007.
98
AUDI 2006 ANNUAL REPORT
SPORT: IN BRIEF
Football stars
driving the Audi Q7
Audi motor
sport legends at
Goodwood
They are among the best on the pitch, and
now there’s no stopping them on the
roads! The stars of Barcelona, Bayern Munich and Real Madrid were handed the
keys to their new Audi cars in 2006. The
Above: A sporty partnership: Audi and FC Barcelona.
Below: Javier Saviola with his Audi Q7.
favourite was the new Audi Q7, in which all
Audi focused on the
the Spanish players now arrive for train-
sports expertise of the
ing. Bayern Munich captain Oliver Kahn
brand with the four rings
and seven of his team colleagues also
at last year’s “Festival
opted for the sporty SUV. Audi and the
of Speed” at Goodwood,
current holders of the Champions League
England, one of the
title, Barcelona, forged a new partner-
world’s leading classic car
ship involving the provision of cars for the
events. Spectators were
players for a period of at least two years. A
not only able to view the
close partnership has already existed with
current Le Mans cham-
Germany’s record-breaking champions
pion, the Audi R10 – the
since summer 2002. Real Madrid’s players,
first diesel-powered car
officials and coach have likewise been
to win this classic race –
driving Audi cars since 2004.
but also such models
as the Auto Union Grand
Prix Type C racing car
S3 – pure driving pleasure
from 1936, which ran out
Audi introduced a highly sporty product, the new Audi S3*, in the premium
European Championship
compact segment in September 2006. It redefines the standards of its
at Goodwood exactly
class – at the level of a sports car. The 195 kW (265 bhp), 350 Nm TFSI
70 years ago.
supreme winner of the
engine with petrol direct injection and turbocharger and the quattro permanent four-wheel drive catapult the driver from 0 to 100 km/h in 5.7 seconds. With this sparkling performance, the Audi S3 pursues the ideal of
pure driving pleasure coupled with excellent everyday practicality – like
all Audi S models.
The Audi S3
redefines the
standards
of its class.
Audi
Polo Challenge
A sporting event of particular calibre again took
place at Ascot last year:
the Audi Polo Challenge
2006. This prestigious
event in the British
polo season saw Prince
William follow in his
father’s footsteps and
captain his team in a
match against the team
from Audi UK. Numerous
VIP guests, including
musician Vanessa Mae
PHOTOS: AUDI
and actor Kris Marshall,
took up the invitation
to attend.
* fuel consumption figures at the end of the Annual Report
AUDI 2006 ANNUAL REPORT
99
DESIGN: ITALIAN PERSPECTIVES
Doyens of style
Of perfect proportions, beautiful and ugly cars
Turin is Italy’s capital of automotive design, the city of the “carrozzieri”,
or coachbuilders. What better venue, then, for a meeting between two
men who understand their trade: Giorgetto Giugiaro, icon and founding
father of the styling company Italdesign, and Walter de’Silva, Head of
Volkswagen Group Design. Interview Marco Degl’Innocenti // Photos Mirco Taliercio
The design experts
Giorgetto Giugiaro (left)
and Walter de’Silva on
a casual stroll through
Turin.
100
AUDI 2006 ANNUAL REPORT
M
r. de’Silva, when did you discover
that wanted to get right to the top, something
Giugiaro? And you, Mr. Giugiaro,
it has subsequently achieved. I particularly re-
when did you discover de’Silva?
member Dr. Ludwig Kraus, whom Ferdinand
Piëch had poached from Mercedes and brought
DE’SILVA: Giugiaro was already a big name when
to Ingolstadt. He needed a whole day to reach
I started my career. He was my idol. I still remem-
a decision on the curvature of a rear lid. It was
ber leafing through an Italian design magazine
already clear that the Audi brand had the quest
called “Stile Auto” that my father brought home
for absolute perfection in its blood.
for me. That was in about 1972, two years before
the appearance of the Mark 1 VW Golf that
You are both regarded as doyens of style.
Giugiaro had designed for Volkswagen. At that
What is the significance of a car’s styling?
time, there were Pininfarina, Bertone and him. I
DE’SILVA: I would first of all emphasise how im-
fell in love with automotive design when I read
portant Italian style still is for automotive design.
that magazine and looked at the drawings.
We are ambassadors all over the world. I live and
GIUGIARO: Walter then joined IDEA, a new car
work in Germany and am conscious that our
design studio that had been set up in Turin in the
creativity, simplicity and good taste are held in
1980s. He soon made a name for himself in our
high esteem. That’s very satisfying to know. And
circles. He honed his skills by switching to Alfa
also very important, because it means that a grand
Romeo and indisputably became the new star in
tradition is being upheld. Italian style has made
the firmament of automotive design. And I be-
an indelible mark on the car industry, on indus-
lieve I too played a small part in Walter’s suc-
trial design and in the fashion world. That’s very
cesses. One day Ferdinand Piëch asked me what
nice, and we hope it will remain so in the future.
I thought of de’Silva, whom he wanted to recruit
GIUGIARO: That’s right, Walter, though Italian
for SEAT within the Volkswagen Group. And I
style has also been copied by others for commer-
said: that’s the best choice you could possibly
cial purposes. Particularly by the Japanese, who
Walter de’Silva (57) is
make. So I even knew about de’Silva’s new post
have learned a lot from our special approach.
rated as one of the
at SEAT before he himself did! (smiling mischie-
Italy was a poor country after the Second World
best car designers in the
vously …)
War. So we designers had to work with the few
things that we had at our disposal. Minimal use
world. The Italian was
Chief Designer of the
That makes Giugiaro one of the patrons of your
of materials, avoidance of superfluous repeti-
Audi brand group from
career, Mr. de’Silva. But what does Giugiaro
tions: simple design was born out of necessity.
March 2002 to January
mean for car design?
That’s why it is possible to state that Italian style
2007, and therefore
DE’SILVA: Giorgetto is our leading light. He was a
stems from a mentality that has also borne fruit
also responsible for
teacher to us young designers. Because com-
in other areas.
SEAT and Lamborghini.
pared with designers such as Pininfarina and
Since February 2007,
Bertone, he also broke with traditions. With his
It’s now very rare to see a car that is really ugly.
de’Silva has been Head
company Italdesign, he viewed the car more
Why is that?
of Volkswagen Group
clearly in the context of industrial design and did
DE’SILVA: Perfect proportions are always partic-
Design. He began his
not limit himself to purely stylistic aspects of the
ularly appreciated. If everything is in the right
career in 1972 at the Fiat
body. The way he presented his work also set him
place in a car, the effect is balanced.
Design Centre in Turin.
apart from the rest. He was always one step
GIUGIARO: The car as a product has now become
ahead of everyone else.
much more mature. All vehicles are much more
progressive today, and that impacts the design.
Giorgetto Giugiaro (69)
Mr. Giugiaro, as well as the Mark 1 VW Golf you
is an Italian industrial de-
designed the first Audi 80 from
signer of world renown.
1978. What do you recall of that
He was a student of
project?
Bertone and, in 1967, es-
GIUGIARO: I remember all the
tablished the company
things that the manufacturer want-
Italdesign, active pre-
ed to put into that car. At that time
dominantly in the field of
we regarded it all as utterly utopian.
automotive design and
Aluminium, windows flush with the
“Attractive
cars will always remain
attractive
and survive
short-lived
fashions.”
now run by his son.
outer skin. Audi was already a brand
Walter de’Silva
People notice that, just like good music.
How can you tell whether a car is
stylistically successful or ugly?
GIUGIARO: To assess a car, you
have to experience it out on the
roads, alongside others. A car is
something to be experienced with
patience. At motor shows we often
see new models that we’re
AUDI 2006 ANNUAL REPORT
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101
DESIGN: ITALIAN PERSPECTIVES
not convinced by. And then we tend to arrive at
wrong, premature judgements. When I see a new
car, I always say: wait and see what it looks like
on the road.
DE’SILVA: I couldn’t agree more. Only when it’s
on the road can you tell what aspects of a car are
attractive or ugly, right or wrong. And you then
see it at first glance.
Are fashions sometimes too much to the fore?
DE’SILVA: It happens. But attractive cars will always remain attractive and survive short-lived
fashions. I remember two world-famous cars by
Giugiaro: the first VW Golf and the Lancia Delta. I
always greatly admired their proportions and
volumes. The longer you contemplated them,
the more attractive they became. The principle
remains equally valid today.
GIUGIARO: There are manufacturers who attach
greater importance to originality than to good
taste. But their innovations are short-lived.
Yet your creations must be long-lived. And as
designers, you are always anticipating future
trends …
DE’SILVA: Yes, of course. Developing a car takes
on average four to four and a half years. Our
clocks are always running fast, so to speak. The
customer never notices it, but our clocks are always set to summer time – the difference being
four years.
But how do you do that?
GIUGIARO: By applying logic. Because the difference is always in the dimensions, the curves are
dimensions. We merely have to keep a watchful
eye on the spaces that have to be filled; these
spaces are not the same ones as before. Even
though I can state rather selfishly that we do the
things that we like doing.
“To assess
a car, you
have to
experience it
out on the
roads, alongside others.
A car is
something to
be experienced with
patience.”
Giorgetto Giugiaro
are fitted simply to keep up with the competition.
But they are of course indispensable in premiumsegment vehicles.
But comprehensive electronic equipment is still
a positive.
DE’SILVA: Yes, of course. Even if we wanted to, it
would be difficult to scale back equipment levels
again. My youngest son is eight years old. He
has grown up with mobile phones and games
consoles. Whenever he gets into a car, the first
thing he checks is whether it has sat-nav. It’s
perfectly normal for him to want it used for
What do people expect of a car these days?
certain routes – he simply doesn’t think twice
DE’SILVA: In such a mature sector as the car in-
about it. That’s what we call the “Playstation
dustry, customers want everything. But I think
generation”.
more work is needed on the quality of cars’ interior equipment. Without resorting to too many
But the introduction of certain technologies
technical gimmicks.
and the corresponding legal safety requirements
GIUGIARO: People want everything, and more.
is also restricting the scope of designers.
A low-slung sports car, a normal notchback
Airbags for instance cause structural and space
saloon, an SUV, an off-roader – they want some-
problems.
thing fantastic. People are spoiled. For instance,
DE’SILVA: I remember the debate about seat
quality and comfort are also important on
belts and particularly airbags. When the first
compact cars. Customers also expect compact
airbags arrived, all the designers and planners
vehicles
comprehensively equipped.
were wringing their hands asking: “Where on
Sometimes things can get a bit exaggerated, for
earth are we going to put these giant things?”
instance if a computer and navigation system
We are now confronted with new requirements
102
to
be
AUDI 2006 ANNUAL REPORT
GIUGIARO: As for me, the answer is no. Strange
another set of regulations. But another chal-
Four decades
of design
lenge that we will cope with.
01. Audi 80 (1978) by
shapes. Designing cars is a way of expressing
GIUGIARO: Yes that’s right, we’re becoming
Giorgetto Giugiaro
my visions for shapes. I enjoy creating cars, but
more and more dependent on regulations and
02. Audi R8 (2006) by
not owning them. I wanted to be a painter, and
laws, but they also make us more and more
Walter de’Silva
look what became of me! I’ve got only pictures
creative. We welcome intelligent laws that
03. Audi Karmann study
and paintings on my walls at home, but no car
boost safety, cut fuel consumption, protect the
(1973) by Giorgetto
photos.
environment and improve traffic conditions.
Giugiaro
They also give us fresh impetus to create new
04. Lamborghini Marco
things.
Polo study (1982) by
Marco Degl’Innocenti, 58, freelance journalist,
Giorgetto Giugiaro
was born in Perugia (Italy) but has lived and
Is there anything that de’Silva always wanted to
05. Audi Nuvolari quattro
worked in Germany for many years. He writes
ask Giugiaro?
study (2003) by Walter
DE’SILVA: There’s one question I’d really like to
de’Silva
ask: are you still able to get up and go into the
06. VW W12 Roadster
office with the same level of motivation every
study (1997) by
day?
Giorgetto Giugiaro
GIUGIARO: Although I have delegated all the
07. SEAT Leon (2005) by
tasks that aren’t directly related to my work to
Walter de’Silva
other people, challenges still interest me. Yes,
08. Golf I (1974) by
I’m still as enthusiastic about going into the
Giorgetto Giugiaro
office as I was 50 years ago.
09. Lamborghini Gallardo*
on “pedestrian protection”. Unquestionably yet
to say, but I am not a car enthusiast. I love
for La Gazzetta dello Sport, La Stampa and
Auto & Design, among other publications.
(2003) by Walter de’Silva
What sort of Audi are you next expecting from
Walter de’Silva, Mr. Giugiaro?
01.
GIUGIARO: When I look at the current Audi A6,
for instance, I say: the next one will be even
better, even though this one is already the best.
You always expect more, not less, from de’Silva.
It is inconceivable that someone might say of
02.
one of his cars: “The last one was better.”
03.
What as yet unfulfilled dreams do you both
have? What car would you still like to create?
DE’SILVA: I always dream that my next dream
will come true. Or better still: that I will keep coming across people who will help me to fulfil a
04.
05.
dream. Now that I have created the Audi R8*, my
first mid-engine car, I don’t know if there is
anything left on my wish-list. Maybe I’d like to
design a car like Giugiaro’s first Fiat Panda, a car
07.
for everyone.
GIUGIARO: My dream is creating an ultra-short
06.
car that has just as spacious an interior and
luggage compartment.
You are established car designers, but are cars
also your passion?
PHOTOS (RIGHT): ITALDESIGN, AUDI
DE’SILVA: For me, definitely. I’ve loved cars ever
08.
since I was a child. But form is the crucial thing
for me. Whenever I am sitting behind the wheel,
I am just an ordinary car driver. But I want to enjoy driving a car. Driving is no end in itself for me.
09.
I appreciate cars more for what I feel rather than
for what I see.
* fuel consumption figures at the end of the Annual Report
AUDI 2006 ANNUAL REPORT
103
Can flying
really be
more exhilarating?
The pilots of the first and only Italian
aircraft carrier “Giuseppe Garibaldi” may
now have cause to doubt this. Three
Lamborghini Gallardo Coupé* models
and a Murciélago LP640 Coupé* took up
position on the deck of the Italian navy’s
flagship for a photo shoot with a difference. Here is just some of the technical
data of this “uplifting” backdrop moored
in the military harbour of Taranto: 13,850
tonnes, 180 metres long, 33 metres wide,
draught 6.5 metres, 550-man ship’s crew
and 225-man flight crew, plus eight helicopters and twelve Hawker Harrier vertical
takeoff jets. One of these fighter planes
is pictured alongside the Lamborghini
Murciélago LP640 Coupé. As well as being
broadly as quick off the mark as the jet,
the super sports car from Sant’Agata is
fitted with an engine producing a sound
reminiscent of aircraft engines. Whether
the Italian navy may be considering
ordering a Lamborghini in NATO green
metallic is not for us to say.
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AUDI 2006 ANNUAL REPORT
* fuel consumption figures at the end of the Annual Report
PHOTO: AUDI
DESIGN: MEASURING STRENGTH
AUDI 2006 ANNUAL REPORT
105
DESIGN: ARCHITECTURE AND ART
Motion
and emotion
“Cars are cultural expressions
of movement,” declares
star architect and Audi A8 driver
Frank O. Gehry.
“Simplicity of thinking” – simple, functional
and clear: that is how star architect Frank O.
In conversation with
Jan van Rossem,
Frank O. Gehry is constantly in motion.
Gehry likes things in his private life. For instance when it comes to the thoroughly convenient operating principle of his 12-cylinder
Audi A8*: “Because everything is quick and
logical to pick up.” Many of his spectacular
edifices of aluminium, glass or humble engineering brick do not do the onlooker this
favour. Like the Walt Disney Concert Hall in Los
Angeles, one of his most recent masterpieces,
they embody the exact opposite of simplicity,
and are veritable marvels: confusing collages
of intertwining forms and subversive structures that dance and reel, daringly playing
with gravity in front of the onlooker’s eyes,
seemingly on the verge of toppling over or veering away. There is – seemingly – no semblance
of order. “I try to express my feelings and
emotions in my buildings,” states the awardwinning master of Deconstructivism. Scarcely
anyone who contemplates his works will doubt
that claim. Gehry continues: “For me, there is a
close connection between motion and emotion,” drawing an analogy with the car.
There is another overlap between these two
spheres: the Canadian genius, a native of
Toronto, uses a design program that was actually created for the car industry. “Many of my
designs would not have been possible without
that software. See how closely dovetailed the
two disciplines are,” he declares with a wry
smile, as if to emphasise the apparent contradiction that such an iconoclast of established
architectural clichés should want to abide by
rigid design principles. As in the Walt Disney
Concert Hall in Los Angeles, structures pull in
different directions in order to allow spaces to
flow into one another.
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AUDI 2006 ANNUAL REPORT
Apart from his villa,
the Walt Disney
Concert Hall is “the
only building that I
use regularly myself,”
admits Frank O. Gehry.
Breathtaking
appearance: the star
architect loves to
design distorted building shapes that confuse
the onlooker’s eye.
Left: the Guggenheim
Museum in Bilbao.
Above: Neuer Zollhof,
Düsseldorf.
Frank O. Gehry’s
buildings
쐽 California Aerospace
PHOTOS (LEFT PAGE): AUDI, (RIGHT PAGE): TIBOR BOGNAN (TOP), GUENTHER ROSENBACH (TOP RIGHT)/CORBIS
Museum, Santa Monica,
In this particular instance gleaming alu-
This white-haired man has not only given
minium – a material that Audi is currently using
Los Angeles a new landmark. Having already
쐽 American Center, Paris
to embody innovation in the similarly bold
won the Pritzker Prize, the architects’ equiva-
(1991–1994) (currently the
R8* super sports car – forms the shimmering
lent of the Oscar, in 1989, he cemented his
Cinémathèque Française)
skin of a roller-coaster transformed into a con-
international acclaim with his design of the
쐽 Zentrum für Kommu-
cert hall, with astonishingly good acoustics.
Guggenheim Museum in Bilbao. He is responsi-
nikation und Technologie,
The project does not look as if it took Gehry
ble for a number of other iconic buildings, too.
Bad Oeynhausen
20 years to push through, initially having to
In Germany, his three buildings for the Neuer
(1991–1995)
overcome the bitter opposition of a few cultur-
Zollhof in Düsseldorf’s Medienhafen aroused
쐽 Guggenheim Museum,
ally shocked souls who dubbed it a “horror”
considerable interest. Berlin, Hanover and
Bilbao (1991–1997)
and a “violation of the cityscape”. The battle
Herford also have the good fortune to boast a
쐽 Dancing House
was worth it. And, he explains, “It is the only
genuine Gehry in their urban silhouette. Nor
(Tančicí düm), Prague
building apart from my villa in Santa Monica
is any end to his creative urge in sight: he is
(1994–1996)
that I use regularly myself. I often go to con-
building a 75-storey skyscraper in Manhattan, a
쐽 Neuer Zollhof,
certs there.”
giant basketball arena for the New Jersey Nets
Düsseldorf/Medienhafen
Gehry regards himself as a friend of, and his
in Brooklyn and another Guggenheim Museum
(1997–1999)
work as part of, the fine arts. “Historically
in Abu Dhabi. His personal wish for a new place
쐽 Energie-Forum-
speaking, architecture was always an art disci-
of his own in Venice will probably have to wait.
Innovation, Bad Oeyn-
pline. I don’t know who started it or why, but
“I can’t seem to get round to it.” At the start of
hausen (1992–1995)
latterly architecture seems to have been de-
his career he designed the famous Norton
쐽 Experience Music
based in the minds of some people.” Gehry, in
House, with its corrugated iron, wire netting,
Project, Seattle
any event, is standing his ground. During his
wood and colourful tiles, here in Venice Beach.
(1999–2000)
“moments of truth” at the start of a project, he
“Cars are cultural expressions of movement;
feels like a painter in front of a blank canvas.
that of course also inspires me in my work,”
(2000–2001)
“Then everything falls into place. Formal and
confides Gehry, glancing at the brochure of
쐽 DZ BANK building,
compositional decisions are taken, the colours
the new Audi R8 with a smile. “I wouldn’t mind
Berlin (2001)
are determined and the materials chosen. You
taking an R8 for a drive.” We couldn’t agree
쐽 Walt Disney Concert Hall,
can’t undo those things once they are done.”
more, Mr. Gehry!
Los Angeles (1989–2004)
California (1982–1984)
쐽 Gehry Tower, Hanover
The results corroborate his claim that buildings
쐽 Museum MARTa Herford,
are sculptures in the public domain.
Herford (2001–2005)
* fuel consumption figures at the end of the Annual Report
AUDI 2006 ANNUAL REPORT
107
DESIGN: IN BRIEF
The tailormade TT
Building a car is like tailoring a made-to-measure suit.
Taking that conviction as its starting point, Audi Denmark invited four design students to customise the new
in brief:
Audi TT Coupé as they saw fit in a project entitled “The
design
tailormade Audi”. They spent three weeks putting their
Award-winning
TT body
visions into practice, hand in hand with designers from
The Automotive Circle
Audi, Bang & Olufsen, Georg Jensen and munthe plus
International presented
simonsen. The Danish design company unveiled the cus-
Audi with the EuroCar-
tomised coupé as a feature of its exhibition entitled “Fas-
Body Award in recognition
cination of Transport”. Then Audi Denmark auctioned off
of its innovative body
the car at the end of the year, with most of the proceeds
concept for the Audi TT.
being used to fund scholarships for young designers.
The sports coupé scored
highly for its “Audi Space
Frame” (ASF), beating
13 competitors from all
R8 as an object of art
at “Design Miami”
The design world meets every year
over the world. The
at “Design Miami” in Florida to pres-
developers used a hybrid-
ent and assess the latest trends
construction ASF for the
from the worlds of art and lifestyle.
very first time in the body
Reflecting its trend-setting role in
of the new TT. It represents
automotive design, Audi participat-
an ingenious combination
ed as exclusive vehicle sponsor and
of aluminium and steel
caused a stir with its spectacular
components. Thanks to
installation based around the R8*
the use of hybrid construc-
sports car. The sculpture “Ignition R8”,
tion, the TT bodyshell
standing around ten metres tall, sym-
weighs around a third less
bolises the ignition in the mid-engine
of what it would if it were
of the Audi R8 as the “Big Bang” of dy-
made entirely of steel.
namism. “Our new sports car is made
part of the design and art scene by
sportiness of the model in an artistically sophisticated way,” explained
The Audi R8 presented as the “Big Bang” of dynamism.
108
AUDI 2006 ANNUAL REPORT
Head of Design Walter de’Silva.
* fuel consumption figures at the end of the Annual Report
PHOTOS: AUDI
an object that evokes the sheer
CULTURE: SEAT
A good
feeling
The new man at the helm
of SEAT: Erich Schmitt
Erich Schmitt has been a member of the Board of
Management at AUDI AG since November 1992.
A mechanical engineer by background, he spearheaded
the Purchasing Division and the Audi company’s
activities in China for some 14 years. He has been
Chairman of the Board of Management at SEAT, S.A.
since October 2006.
“auto emoción” is the SEAT brand slogan. In fact,
Spain’s only car brand is as charged with emotion as the Spaniards themselves. The car is a
product that addresses feelings directly. And it
wants to show the good feeling that a customer
has when driving their car. A car is therefore always a statement, too. The philosophy of the
SEAT brand appeals to young people in particular. That could not be more appropriate. Because
SEAT is a youthful, sporty, ambitious brand. You
can tell that straight away from the dynamic design of our vehicles. And you feel it the moment
you get behind the steering wheel of one of our
models.
SEAT customers are modern customers who
also believe it is important to protect the environment. Because there is no contradiction between sportiness and low fuel consumption at
SEAT, thanks to the high-performance, progressive engines in our models.
Our strategy is to delight the customer. A clear
objective that encompasses all areas of the company – Development, Production, Sales and
Service. We have defined an array of measures
with which we aim to achieve this: we will enter
new markets, further improve our dealer network,
enhance the efficiency of our corporate processes and add new, attractive models to our product
range. We are heading in the right direction, as
reflected in the rise in unit sales for 2006.
To achieve our objectives, we seek to offer topquality products at attractive prices. A combinaPHOTO: CLAUDIA KEMPF
tion that is bound to give every SEAT driver a
good feeling.
AUDI 2006 ANNUAL REPORT
109
Traveller between two worlds: Luc Donckerwolke,
SEAT Head of Design, at his comic-book
and real-life workplaces.
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AUDI 2006 ANNUAL REPORT
CULTURE: COMIC AND DESIGN
“Lucky Luc”
The fastest pen
From reality into the world of comic books, and back:
Head of SEAT Design Luc Donckerwolke found his way into his
profession via “Michel Vaillant”. As a hobby he occasionally
contributes drawings for comic strips about racing drivers,
sometimes even cropping up in the stories himself. His design
of the SEAT Ibiza Vaillante show car is dedicated to his idol.
Text Franz-Peter Hudek // Photos Reinhard Schmid // Illustrations Philippe Graton
L
iterature’s favourite heroes include those
the creation of a high-speed sports car, the
who take the art of inhabiting two worlds
Vaillante Mirage – from the first secret test drives
to the extreme. Something that all of them
beneath the bodywork of a Lamborghini Mur-
– from Pinocchio and Faust to Count Dracula and
ciélago to the unveiling of the finished product
Spider-Man – all have in common is their pen-
at the Geneva Motor Show.
chant for grand gestures and often hectic drama.
What is more, not only is the Murciélago
But here is one denizen of two worlds, a Belgian
camouflage a real-life, original Donckerwolke
living in Spain, who is different: Luc Doncker-
design dating from his time as Head of Design at
wolke, Head of Design at SEAT.
Lamborghini; so too is the fantasy super sports car
Seated at the desk of his glazed office in a zone
shielded from prying eyes, above the light inner
Vaillante Mirage, along with four other Vaillante
models, unveiled in Geneva.
courtyard of the SEAT Design Centre in Sitges,
Even Donckerwolke himself secures a bit-part
near Barcelona, is a politely restrained forty
role in the comic strip: at the design studio of the
year old, dressed casually in black as is his wont.
fictional sports car manufacturer Vaillante, he
And he is reading a comic book, a hardback
can be seen discussing the latest car designs
classic from Belgium, Michel Vaillant Volume 64,
with racing driver Michel, his older brother and
‘Operation Mirage’ (for more information about
company boss Jean-Pierre and company founder
Michel Vaillant, visit www.michelvaillant.com).
Henri Vaillant. But how does an established car
A fantasy story set in a world with which he can
designer, complete with his designs, find his way
Michel Vaillant
identify. The story narrates the fantastic tale of
into a Belgian comic book about racing drivers?
is a comic-book character
created in 1957 by the
The Vaillante Mirage – a fantasy super sports car that
Donckerwolke created for the comic book series.
It all began with a present.
French artist and author
The much-travelled son of a diplomat recounts:
Jean Graton. Vaillant
“As a child, I caught an African fever when we
is a racing driver for the
were in Burundi. As a get-well-soon present my
family-run racing team
father gave me a Michel Vaillant comic book,
and has won several
which immediately captivated me. That was the
Formula 1 World Champi-
moment I started drawing cars.” The regularity
onship titles. 69 Vaillant
with which new Vaillant volumes appeared
each year was one of the few constants in a
albums had been published up until 2006.
youth dominated by frequent moves. Little
Luc soon knew his vocation: “I definitely
wanted to be a car designer”.
>>
AUDI 2006 ANNUAL REPORT
111
The comic fan of course had to visit compatriot
exhaust tailpipe, the chunkily sporty look and the
and Michel Vaillant creator Jean Graton in Brus-
V emblem on the hubs of the newly designed
sels, who created the first volume with its realis-
alloy wheels all supply clear evidence. But the
tic-looking cars and motor-racing VIPs as long
Ibiza is still a far cry from the flat alpha-male rac-
ago as 1957. “That was in 1990,” recalls ‘Lucky
ing car that a proper Vaillante would obviously
Luc’, “and ever since then I’ve been drawing rac-
look like.
ing cars and fantasy sports cars with the Vaillant
Luc Donckerwolke
and Philippe Graton
(left), author of
the Vaillant comics,
in the car.
‘V’ on the front for the comic-book series purely
A car for great adventures
as a hobby.”
Luc explains why: “This is the Ibiza for Michel
Jean Graton’s son Philippe has been running
Vaillant. It still has to be identifiable as a current
the company since 1994. He writes the stories
SEAT model, but echo the style of a Vaillante –
and, together with his team of cartoonists in
more masculine, more sporty and with sharper
Brussels, maintains the incomparable, tradition-
contours than the production version.” And
al Vaillant style.
Philippe Graton adds: “The Ibiza Vaillante isn’t a
Today, however, Philippe is visiting Luc in
motorway racer, it’s a car for great adventures,
Sitges. They are the creators of an actual, road-
such as a transcontinental marathon rally.
going Vaillante, the SEAT Ibiza Vaillante. The
Maybe we’ll even see this car in action in one of
matt blue body, the V on the radiator grille and
the next volumes.”
More masculine and sporty:
the Ibiza Vaillante is
dedicated to the fictional
idol and comic-book hero
Michel Vaillant.
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AUDI 2006 ANNUAL REPORT
CULTURE: COMIC AND DESIGN
The prominent “V” on the helmet
is the hallmark of the true fan.
the B-post in glossy black provides an interesting
contrast.
The technology of the Ibiza Vaillante has been
adopted in part from the SEAT Leon Cupra R:
the track-widening suspension and the uprated
1.8-litre four-cylinder turbo petrol engine, now
developing 177 kW (240 bhp). This gives the
1,050-kilogram Spanish model a racy top speed
of 250 km/h and enables it to accelerate from 0
to 100 km/h in six seconds.
The standard SEAT Ibiza in the petrol-engined
Cupra version* likewise delivers an unrestrained
132 kW (180 bhp). It is the fastest car in the compact segment, at 229 km/h. It touches 100 km/h
after only 7.3 seconds. Michel Vaillant has made
a good choice – even in the normal SEAT Ibiza
Cupra he would race away from his challengers.
The Ibiza Vaillante took five weeks to create, and
simply had to be ready for the Geneva Motor
Show. That is why it also proudly sports the name
Ginebra – the Spanish for Geneva.
An interesting footnote to the story is that this
compact car itself spent some time travelling
between the real and the fantasy worlds, as
Donckerwolke reports in amusement: “There
was a version with a second Vaillante V on
the front radiator grille, likewise positioned beA SEAT press kit in
the style of a Vaillant
comic book was
compiled specially for
the presentation
at the Geneva Motor
Show.
neath the headlights. We did away with it immeDonckerwolke shows a few design details of
the matt blue wonder-car that are not obvious at
diately – that Ibiza looked like something out of
Dracula.”
first glance: “First we removed all light edges
and rubbing strips from the body, including
on the tailgate – and even the door handles.
Dr. Franz-Peter Hudek began his career in jour-
Then we made the wheel arches four centi-
nalism as Sports Editor at “auto motor und
metres wider on each side. They were the only
sport”, where he was also responsible for motor
features to be given a prominent light edge. The
racing (including Le Mans 24 Hours, Indiana-
front wheel arches taper into narrow vent gills
polis 500, DTM). He also worked at AUTOFOCUS until mid-
adjoining the flared sills at their base.” Finally,
2006, when he then joined the Motor Klassik editorial team.
* fuel consumption figures at the end of the Annual Report
AUDI 2006 ANNUAL REPORT
113
CULTURE: AMBASSADOR LANG LANG
Striking a balance between
feeling and reason
Accomplished virtuosity: the Chinese pianist Lang Lang has
taken concert-halls worldwide by storm. Impeccable technique
and sensitive interpretation are the hallmarks of this
official Audi ambassador, who always travels to his concerts
in a car sporting the four rings. Text Xiao Hui Wang
That evening, Lang Lang made an extraordi-
concert in Shanghai’s Grand Theatre, where I
nary impression upon me. I felt the force that he
After his breakthrough
was a guest of the Deputy Minister of Culture
radiated despite his youth, a boundless energy.
at the Ravinia Festival in
Wu Qidi. Before the concert started, I got into
He had already cast off all youthful lack of so-
Chicago in 1999, Lang
conversation with an elderly gentlemen in the
phistication; his technique was flawless. I myself
Lang went on to become
next seat, who was accompanied by a grand-
spent my childhood in a musical environment.
one of the most success-
daughter who must have been about five or six
My mother, a professor of composition, had in-
ful pianists in the world.
years old. During the concert he kept whispering
troduced me to the world of the piano. Virtually
The 24 year old started to
in the girl’s ear, all very seriously and patiently.
every child on the campus of the conservatoire
learn the piano at the age
To my surprise, they both vanished after the
where we lived at that time learned to play an
of three, first of all in his
interval and their seats were instead filled by a
instrument. I had experienced at first hand the
home city of Shenyang
young couple who explained to me that tickets
travails of piano exercises and the difficulties of
in Northeast China. He
had been too expensive for all the family to
piano techniques. Technical perfection is the
embarked upon his stud-
come, so they had decided to share the concert.
indispensable basis, but what effort it takes to
ies at the Conservatoire
The entire family was unanimous in the view that
achieve it! There is a very graphic Chinese
in Beijing at the age of
the little girl ought to become a pianist.
proverb that goes: “It takes more than one day’s
nine, before moving
frost to make ice three cubits thick”. But tech-
to the Curtis Institute of
Boundless energy
nique alone will not help you reach the higher
Music in Philadelphia.
A popular dream in China today, but what
echelons of piano-playing. More than merely
His tours have included
prospects does someone have of becoming the
mastering rhythm, tempi, beats, versatility and
concerts starring Daniel
next Lang Lang? After giving a lecture at the
tension, it takes feeling and understanding, the
Barenboim, James Levine
Academy of Arts in Taipei, I was asked by stu-
ability to interpret and get beneath the skin of
and Lorin Maazel.
dents plagued with self-doubt whether – assum-
a work, and the knack of picking up the com-
ing someone had the necessary passion for art –
poser’s style. The analogy could be drawn with
it would be possible to become a successful artist
an athlete: to make it to the Olympics you need
by sheer graft. How much of an artist’s career
top-class technique, but inner constitution and
success depended on talent, and how much on
the ability to concentrate on the decisive mo-
hard work? “60 percent talent and 30 percent
ment are ultimately what make all the difference.
hard work” was my answer. Introduce into the
In other words, self-belief, resolve and mental
equation the ability to meld knowledge and rea-
strength are more decisive than physical
son with feeling and passion – plus a little bit of
prowess. I would even go so far as to assert that
downright good luck. All the graft in the world
making the leap to the top depends to some
will not be enough to transform an untalented
degree on fate, and is by no means a chance
person into a maestro, but equally a great artist
affair.
cannot rely on their natural gifts alone.
114
AUDI 2006 ANNUAL REPORT
>>
Tension and versatility:
Lang Lang at his
much-acclaimed performance during the Audi
Summer Concerts.
PHOTOS: AUDI
I
Lang Lang, international star
met Lang Lang for the first time in 2003 – at a
AUDI 2006 ANNUAL REPORT
115
The Audi
ambassador
fidence, openness, an awareness of his status of
Lang Lang has been an
a star, and a sense of humour. Humour is a mani-
international ambassador
festation of confidence, and confidence is a sign
for Audi since 2006.
of success. Even before he started to play his
Whether playing at
piano, the young man came across as likeable.
concerts in Chicago’s
He was quite unlike other Chinese stars that
Orchestra Hall, at the
I know: he was utterly unaffected, and acted nat-
Salzburg Festival or at
urally and spontaneously – and that is precisely
the 2008 Olympics in
how he plays. I suspect this has something to do
Beijing, the virtuoso
with the many years he has spent living abroad.
pianist always arrives in
His manner expressed utter independence,
His demeanour was a very natural blend of con-
openness and relaxation. He came across as
an Audi. Two perfectly
matched partners, both
with premium creden-
The technically perfect Lang Lang appreciates
perfect automotive technology.
easy-going, direct and in touch with himself –
key requirements in an artist. These qualities
allow an artist to dedicate themselves unre-
tials. Both hold the power
The second time I met Lang Lang was at the
servedly to their art and become one with it. In
through their dynamism,
press conference for his new recording of
a world of their own. The extent to which he
technical prowess and
“Dragon Songs” at the end of 2006 in Munich. He
immersed himself in that world became clear to
desire to become even
allowed our handshake to linger, probably for the
me as he played.
better. Both espouse the
sake of the photographers. He remembered me,
That evening, he performed works by various
virtues of perfection,
he said, and wanted to introduce me to his
composers, from various periods and of various
innovation and emotion.
friends. Never before had I felt such soft hands,
styles, Chinese and Western, each one of them
whether belonging to a man or a woman. He had
delivered with astonishing mastery. In one clas-
matured over the years since we had last met.
sic Chinese piece he was even able to tease the
The childlike facial features of a big boy, which
poetry of a Chinese picture out of the grand
was how I remembered him, had been trans-
piano. It was almost beyond belief how his touch
formed into those of a handsome young man.
evoked the tender flowing of the silk strings of
to captivate others
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AUDI 2006 ANNUAL REPORT
CULTURE: AMBASSADOR LANG LANG
a Chinese plucked instrument. Only a musician
very few. Watching him play elicits a stirring,
who is living in complete harmony within Euro-
memorable pleasure that cannot be described in
pean culture could coax such an accomplished
words.
Oriental sense of beauty out of a Western instru-
It left a tune by Liszt going through my head
ment without making it sound alien to Western
the whole evening, and in fact for several days
ears. Even though many pieces demand extreme
after. I still have a vivid recollection of Lang
technical bravura, the entire concert was free
Lang’s virtuoso dexterity: from where I was sit-
from any boastful posturing, and was instead
ting in the first row, I watched entranced as his
imbued with innate musicality and deep respect
fingers danced over the keys. It became more
for the works being offered.
and more incomprehensible to me how those
soft hands could unleash such forces, magical
Virtuoso dexterity
forces even. We Chinese believe that to become
In a subsequent conversation he described him-
one with the spirit of a work represents the
self to me as an extremely emotional person who
absolute pinnacle of perfection, the fulfilment of
was striving to emphasise the rational aspects of
all genuine artistic striving.
artistic creativity. Possibly because we are both
twins, I too had had to deal with the question of
how to strike that delicate balance between feel-
Prof. Xiao Hui Wang is an artist-photographer,
ing and reason in the artistic process. I explained
author and Head of the Media Arts Centre
to him that feeling was like the water, and reason
at the Tongji University of Shanghai. She has
the barrel that contained it. It is the barrel’s duty
been living and working in Munich and
to give the water a shape and prevent it from
Shanghai since 1986. Numerous exhibitions, awards
flowing away. He agreed.
and books have brought her international renown.
Lang Lang is unquestionably one of those
artistic phenomena of which there can only be
Her autobiography “My Visual Diary”, which has won
awards in China, is now also available in German.
Audi in the Middle Kingdom
Audi extended its success story in China in 2006, bettering the prioryear total by 22,830 units or 38.8 percent, with vehicle sales of 81,708.
Audi has consequently further consolidated its position as the leading
supplier of premium cars in China. This success is shared by both imported and locally built models. Among imported vehicles, the Audi A8
and Audi Q7 are particularly popular with Chinese buyers. The A4 and
A6 L are built locally. In 2006, 77,222 of the models produced at the
Changchun plant were handed over to customers. Vehicles are distributed via the exclusive dealer network of 124 outlets in 87 cities. New
regional offices are supporting the introduction of premium-calibre
service. Cultural and sports sponsorship serve to strengthen the
brand’s image: Audi vehicles will feature at the 2008 Olympic Games in
Beijing as “Official Premium Cars”. Furthermore, Audi is a partner of
the star pianist Lang Lang, the renowned actress Maggie Cheung and
the famous film director Zhang Yimou. In November 2006, the sculpture of the Audi TT exhibited to mark the Beijing Motor Show caused a
sensation in the public and the media.
Audi has been active in China since back in 1988 and holds a ten per-
PHOTOS: AUDI
cent stake in the joint venture FAW-Volkswagen Automotive Company
Ltd. This joint venture built its first Audi vehicle back in May 1996: an
built in Changchun, 4,486 imported vehicles were sold. By virtue of
Audi 200, which was a modified version of the Audi 100 with V6 engine.
positioning itself in the Chinese market very early on, Audi will continue
Of the 81,708 vehicles sold in China in 2006, the Audi A6 L accounted
to profit from the continuing boom in cars in the most populous nation
for 61,686 units and the A4 for 15,536. In addition to these vehicles
on earth.
AUDI 2006 ANNUAL REPORT
117
The British singer Seal was just
one of many stars at the Summer
Concerts.
in brief:
culture
Audi Summer
Concerts
Great conductors such as Zubin
Mehta, James Levine and Nikolaus
Harnoncourt, leading soloists such as
Anne-Sophie Mutter, Giora Feidman
and Nigel Kennedy and renowned ensembles from all over the world have
Partner of
“Wetten, dass..?”
captivated audiences at the Summer
Europe’s most successful
The 2006 Summer Concerts once
light entertainment TV pro-
again offered a diverse programme
gramme “Wetten, dass..?”
of music – ranging from classical to
(“You bet”) returned after
pop – between July 14 and August 4.
the summer break not just
For the first time, the Summer Con-
with some exciting bets
certs staged guest performances
and big-name guests, but
beyond the Ingolstadt region. Two
also with an additional
new festival venues, Neckarsulm
exclusive highlight: the
and Nuremberg, were added.
new Audi R8* sports car
The highlights of 2006 also included
as the main prize in the
performances by Edita Gruberova,
charity prize competition
Concerts with their artistry.
Montserrat Cabellé also captivated the audience.
Montserrat Caballé and Lang Lang. In
sponsored by the German
partnership with the radio station
Track and Field Association
Bayern 3, pop stars and newcomers
to raise money for the
appearing in Ingolstadt included the
initiative “Active Camps for
British pop star Seal. Towards the end
Young People”. The brand
of the three-week festival, the Salz-
with the four rings is
burg Festival staged a guest perform-
moreover the new car part-
ance of the opera “Il re pastore” and
ner of “Wetten, dass..?”
the new star in the jazz-soul firma-
for three series up until
ment, Jamie Cullum, brought the artis-
June 2009.
tic programme to a successful close.
One euro from the sales proceeds of
every ticket to the Summer Concerts
was donated to the UNICEF campaign
“Unite Against AIDS”. This ensured
that both cultural aficionados and
children suffering from AIDS benefited from the Summer Concerts.
118
AUDI 2006 ANNUAL REPORT
* fuel consumption figures at the end of the Annual Report
CULTURE: IN BRIEF
Audi on the silver screen
Audi Forum for
connoisseurs
Audi is the ideal choice for automotive
leading roles, not just in real life, but also
on the silver screen. The brand with the
four rings has now been appearing in major film productions for a number of years,
in the capacity of car partner. In 2004, Audi
Under the motto “Master
even purpose-built the futuristic Audi RSQ
Chefs Visiting”, two
sports coupe for the event movie “I, ROBOT”
Michelin-star chefs treat-
starring Will Smith. Last summer, Kate
ed guests at the AVUS
Bosworth, alias Lois Lane, could be seen
Restaurant at Audi Forum
driving through Metropolis in the Audi A3
Ingolstadt to exquisite
Sportback in “Superman Returns”. Audi
culinary treats in 2006:
also acted as partner for the filming of
Norbert Niederkofler,
Patrick Süskind’s best-seller “Perfume” in
with one Michelin star,
2006. To celebrate the partnership, a prize
and the three-star Eckart
draw of a one-week tour of the original
Witzigmann, probably
filming locations in Provence in the new
Germany’s most famous
Audi TT Coupé was held. This took place at
chef. Both chefs capti-
an exclusive after-show party hosted by
vated the guests with ex-
Audi and Constantin Film AG, following
traordinary compositions
the opening night in Munich.
of flavours and garnered
Actress Karolina Herfurth,
star of the film “Perfume”.
Mille Miglia – 1,000 miles
from Brescia to Rome
rich applause at the end
of the evening.
The most attractive
roadster of the 1930s:
the Wanderer W 25
The Salzburg
Festival
2006 was an auspicious
year for the Salzburg
Festival: the 250th anniversary of the birth of
Wolfgang Amadeus
Mozart. As well as sponsoring the festival, Audi
acknowledged this anniversary by lending its
financial support to the
rebuilding of the small
festival hall “Haus für
Mozart”. The highlight
of the festival was the
first “Audi Night”, to
which numerous VIPs
and friends of Audi were
invited following the
Audi Tradition entered three historic models in the 2006 world-famous Mille Miglia in Italy.
opening night of Mozart’s
The fastest classic car rally in the world covers the 1,000 miles from Brescia to Rome and back
“Magic Flute”.
in just two daytime stages and one overnight stage. One of the most attractive roadsters
of the 1930s, the Wanderer W 25, was on view again this year. Two performance-reduced
PHOTOS: AUDI
versions of these automotive gems, without a compressor, took part alongside the W25 K with
compressor. The field of Audi starters was rounded off by the DKW Monza, which broke
an amazing five world records in 1956 and was thus celebrating its fiftieth birthday at the
Mille Miglia.
AUDI 2006 ANNUAL REPORT
119
Lively discussion between
technical experts: Gerd-R. Lang
(left) and Rupert Stadler.
T
radition meets modernity in the
durch Technik, it has to do something to
shadow of the North Loop: the
cement that claim authentically. That in-
veil of a dull November morning
cludes measuring up to the competi-
is gradually lifted on an encounter
tion, which is what happens out here on
between a thoroughbred sports car and
the racetrack, but also every day in front
its great-grandfather. And on a meeting
of our customers.
between two men whose hearts beat
faster at the mere mention of watches
Do you believe that what Audi is doing
and whose pulses accelerate at the
today is the logical continuation of what
sound of race engines.
was started with Auto Union’s racing
cars in the 1930s, Mr. Stadler? How
You have both been driving extra-
important to you both is such a factor of
ordinary cars today: the Auto Union
tradition?
Grand Prix Type C racing car from 1936
STADLER: Every brand must be con-
and the ultramodern Audi R8* sports
scious of its own history. A company
car. What is the particular fascination of
needs roots, and also larger-than-life
driving on the Nürburgring – does it tie
characters. Bernd Rosemeyer in the
in with your everyday lives?
1930s, a Type C racing car with immense
LANG: My experience of the Nürburg-
torque of more than 800 Nm at 2,500
ring goes back a long way: it was one
rpm even in those days – these are
of the places I worked at 30 years ago.
some of the highlights of our corporate
I was a timekeeper in Formula 1 racing
history. That’s why I believe you should
and got to know the Nürburgring as a
always be prepared to seek out the
circuit that demanded everything from
positives in your past. And you should
a driver. It was possibly the most chal-
repeatedly look to the past for guid-
lenging racetrack in the world at that
ance on how to shape the future re-
time. I truly admired the people who
sponsibly.
powered their cars around this circuit
LANG: Today I sat in the Auto Union
with such courage and dedication. That
Type C that was driven here before
was a formative experience for me –
the war, giving a display of ultimate
recognising that you won’t achieve any-
performance with Bernd Rosemeyer at
thing half-heartedly.
the wheel. When you now look at the
STADLER: Every racetrack has its very
present day, at the new Audi R8, you
own emotional appeal that arises from
can sense the genes of a progressive
probing the limits. That also involves
company. Then I see a connection
being a touch in front of the others. It’s
between the R8 and my watches: I was
what gives you that feeling of butter-
the first to introduce the idea of
flies in your belly. I’m convinced that the
watches with a glass base. Because I
Audi brand’s motor sport activities are
wanted to show people how beautiful
a worthwhile investment. If a brand
the things we are making are. In
such as Audi lays claim to be sporty and
essence exactly the same principle
progressive, and to embody Vorsprung
applies when I contemplate the
>>
* fuel consumption figures
120
AUDI 2006 ANNUAL REPORT
at the end of the Annual Report
FINANCE: A RACE AGAINST THE COMPETITION
Butterflies
in your belly …
A meeting at the Nürburgring:
what motivates Audi and Chronoswiss
A mild rush of adrenalin on the circuit, and intensive shop-talk
about cars and watches by the trackside: Rupert Stadler, Chairman
of the Board of Management at AUDI AG, and Gerd-R. Lang,
founder and owner of Chronoswiss Uhren GmbH, discuss what stirs
markets and passions. Interview Markus Brakel // Photos Michael Wiegmann
Two successful
businessmen discuss
the parallels between
mechanical watches
and modern sports cars.
“If every bright idea is
immediately dismissed on cost
grounds, paralysis will be
the consequence.” Rupert Stadler
wonderful design of the R8 and view its
that has to resonate with customers –
formance from our team, our workforce,
engine compartment through a pane of
these are the key attributes that matter.
we will ultimately also succeed in mak-
glass.
But we also always have to put across
ing a better job of the things that make
the idea that the price you pay, dear cus-
our location more costly. German engi-
Maybe we can discover a few more
tomer, is one thing. The value you get in
neering enjoys an astonishingly high
parallels: Mr. Lang, what does it take to
return is something you will sense every
market value. But if we abandon our
make a watch a market success? And
day. And that’s what matters.
roots, thinking that we can transfer
all our expertise to somewhere that’s
what, Mr. Stadler, does it take to make
a car “tick”?
It is now commonplace for companies
cheaper, we’ll find that that simply isn’t
LANG: What people acknowledge today
to move production operations to
enough.
is the craftsmanship and complexity in-
countries in Eastern Europe or Asia,
LANG: This healthy restlessness that
volved in making a watch. People once
where labour costs are lower, and
Mr. Stadler mentioned is what pushes
more want watches to be what they
droves of critics are forecasting the end
both our companies, Audi and Chrono-
were for many years: part of our cultural
of Germany as a production base. How
swiss, forward. It means that we are
heritage. They regard them as an item of
do the Chronoswiss and Audi brands
ultimately able to continue satisfying
jewellery for the owner, and a reflection
see matters?
our customers’ requirements. Because
of the customer’s character. You can
LANG: We laid the foundation stone for
they sense that things are happening
gauge a person’s personality by the
the first watchmaking factory in Bavaria
here. In German, the word for restless-
watch they wear. How they think, what
in 2006. I think that answers your ques-
ness, “Unruhe”, is almost identical to
makes them tick. These days, a watch is
tion! I believe we can still be successful
the word “Unruh”, which means balance
expected to keep time accurately as a
while incurring high wage costs. But the
spring in a watch. And this is a part that
matter of course. The mechanical watch,
result must then always be a product
moves very fast. 28,600 times an hour, in
which has been around for almost 500
that other people all over the world
fact. That restlessness sometimes also
years, has reached the limits of its effi-
crave to own. In other words, a high-
entails having doubts about what you
ciency. By that, I mean 99.997 percent
tech product that arouses needs all over
are doing. As long as we feel that rest-
precision. The consumer doesn’t expect
the world. It can’t afford to be a mass-
lessness, I won’t fear for the future of
more than that, because the difference
produced product. It must be some-
manufacturing in Germany.
is no longer measurable.
thing that only we can make here in
STADLER: Creative restlessness also ex-
STADLER: The biggest differentiating
Germany. We will then have prospects
presses a passion for always finding the
feature of our cars can only be that our
of recruiting and employing people
best solution, something that needs to
team of engineers and workers de-
here, and making products that are also
be engendered within the company.
clares: there is a part of me in every car,
in demand in other countries.
And I want to see a permanent, healthy
my personal contribution. This contri-
STADLER: My impression is that we’re
restlessness, because it will always act
bution is prefaced by our company’s
talking as if the prospects for the manu-
as the driving force of performance and
ambition to offer customers highly so-
facturing industry in Germany are much
success.
phisticated, sporty and powerful prod-
bleaker than they are in reality. But we
ucts that are also equipped as individu-
do need to provoke a kind of creative
Where are the limits of this creative
ally as possible. I believe this goes a
restlessness at German production lo-
restlessness? Or, to put it another way,
long way towards making our cars so
cations, because you can easily run the
isn’t there a conflict between creativity
popular at present and explaining why
risk of resting on your laurels once
and costs? Customers aren’t prepared
they tick. The nature of their build qual-
things are going well. But if we can suc-
to buy everything that the engineers
ity, their look and feel, our design idiom
ceed in permanently coaxing top per-
develop …
122
AUDI 2006 ANNUAL REPORT
FINANCE: A RACE AGAINST THE COMPETITION
STADLER: We apply a very simple princi-
sports car, the R8. If we had not given
Ample room for manoeuvre is created
ple. You spend your mornings develop-
the creative process the space and time
when you are prepared to take on chal-
ing your ideas, and your afternoons
to unfold, we wouldn’t have got so
lenges. All that assumes that you are re-
calculating the costs. That guarantees
far so soon. In the final analysis, the
ceptive to change as an inherent attrib-
that the issue of costs doesn’t become
costs of course also have to be within
ute of competition.
the killer argument. If every bright
reason. But particularly in a creative
idea is immediately dismissed on cost
process, it is possible to accomplish
The racetrack is a fitting venue at which
grounds, paralysis will be the conse-
leaps in quality – every team knows that
to be discussing competition: how
quence. That’s why doing things in the
very well!
would you say you measure up to the
right order and striking a balance are so
LANG: Inspiration needs space, and our
competition?
important. Let me give you an example:
country offers a good basis thanks to its
LANG: I believe competition to be of the
we are the first car manufacturer in the
well-qualified people. We need to be the
utmost importance in life. Because I
world to be offering main headlights
ones providing the impetus in our in-
need competitors in order to generate
featuring LED technology. As well as for
dustry…
progress. And because, by their actions,
the daytime running lights, this innova-
STADLER: … and we need to tackle mat-
they are helping to promote the product
tive lighting technology will in future
ters with the right attitude. Resolutely,
I am making.
be used for the low-beam and high-
not timidly, and turning any alleged
beam headlights in our thoroughbred
or actual weaknesses into strengths.
* fuel consumption figures at the end of the Annual Report
I have also helped other brands while
they were being established.
AUDI 2006 ANNUAL REPORT
>>
123
FINANCE: A RACE AGAINST THE COMPETITION
Common ground:
visual appeal
and precision.
“I believe competition to be of the utmost
importance in life. Because I need competitors
in order to generate progress.” Gerd-R. Lang
It was important to do that, in order to
STADLER: Vorsprung durch Technik has
will represent a different way of doing
increase the overall market of that prod-
something to do with pushing back the
things. It will be hosting training
uct. But I have always done things differ-
frontiers and repeatedly probing them,
courses open to watchmakers from all
ently. I have established a Swiss watch-
I think, in order to keep redefining and
over the world. There will be a perma-
maker in Germany. I have made watches
overcoming them.
nent museum, where we will also be
staging events. It’s all designed to pro-
with glass bases, and I have even listed
our suppliers in our catalogue.
What are the biggest challenges that lie
mote the thing that we are proud of:
STADLER: I think the answer simply has
ahead for your companies?
watchmaking.
to be that competition stimulates busi-
LANG: Our future must basically be
STADLER: Increasing globalisation will
ness! Without competition you are in a
about how we can improve our prod-
bring us into greater contact with other
monopoly situation, and that encour-
ucts and do interesting things. And not
cultures in future. Our company will
ages negligence. For me, competition
about how we can keep pushing the
have to adjust to internationalism. We
always defines what the bare minimum
price down. I’m always the first to object
at Audi have a mid-corporate structure
is, thus helping you to discern how
to that, because I make watches the way
in terms of decision-making paths. I’m
much better you need to be. Specifically
I want them to be. Only when I am satis-
pleased at that, because it makes our
at our company, we take our competi-
fied with them do they go on sale. In
decision-making processes much faster
tors very seriously. Not just the competi-
specific, I am currently preoccupied
and
tors we have long been familiar with,
with my new watchmaking factory that
much more efficient. But we are going
our
communication
processes
but above all new competitors who are
to have to deal with partners in China
in a position to bring about paradigm
and customers in Australia and Russia –
shifts with their business models.
Chronoswiss – Swiss
watches from Munich
on every continent, in fact – in such a
When I look at the ideals of both your
Chronoswiss Uhren GmbH (Munich) was
Understand how we “tick”, what our
way that they understand us as a brand.
companies, I can see striking similari-
established by Gerd-R. Lang in
values are and what drives us on. It’s a
ties in a broader sense. Vorsprung
1982, at a time when everyone
question of continuity, and also respon-
durch Technik – and a fascination for
assumed the traditional wrist
sibility. If we can succeed at that, we can
mechanical precision. Is that purely
coincidental?
watch would become obsolete. In manufacturing
LANG: That’s an easy one to answer. Our
exclusively mechanical
customers have to enjoy the product,
watches, Chronoswiss has
whether it’s a Chronoswiss watch or an
heralded in a Renaissance of
Audi, and be captivated by its emotional
the “fascination for mechanical
appeal.
precision”.
124
AUDI 2006 ANNUAL REPORT
be sure of long-term success.
Audi Group
Management Report of the
Audi Group for the 2006
financial year
Consolidated Financial
Statements of the Audi
Group at December 31,
2006
Finances 2006
Corporate Governance
126
Audi shares
127
Business and underlying situation
The Group
Corporate steering
Research and development
Employee matters
Audi in society
Environmental aspects
Underlying economic situation
Business progress
Financial performance
Net worth
Financial position
Report on post-balance sheet date events
Risk report
128
128
131
133
135
138
139
141
144
149
151
152
153
153
Report on expected developments
156
Independent Auditor’s Report
160
Declaration of the AUDI AG Board of Management
161
Income statement
162
Balance sheet
163
Cash flow statement
164
Statement of changes in equity
165
Notes to the consolidated financial statements
Development of fixed assets in the 2006 financial year
Development of fixed assets in the 2005 financial year
General information
Recognition and measurement principles
Notes to the consolidated income statement
Notes to the consolidated balance sheet
Notes to the cash flow statement
Other particulars
Segment reporting
German Corporate Governance Code
Details of the Supervisory Board and Board of Management
Events occurring after the balance sheet date
166
166
168
170
173
178
184
196
197
202
203
203
206
Statement of interests held by the Audi Group
207
Fuel consumption and emission figures
208
125
Corporate Governance
Revision to Code in 2006
In 2006, the Federal Ministry of Justice revised the German Corporate Governance Code and
promulgated the version dated June 12, 2006. The Board of Management and Supervisory
Board of AUDI AG discussed the amendments at length in the past financial year and passed
the appropriate resolutions.
Implementation of the
recommendations and
suggestions
The Code in the version dated June 12, 2006 is complied with. However, the restriction applies that AUDI AG will not disclose the remuneration of members of the Supervisory Board
individually, broken down by component (Section 5.4.7 Para. 3 Sentence 1 of the Code), in
order not to infringe privacy rights.
The Code’s suggestion of taking long-term performance into consideration in the Supervisory Board’s remuneration (Section 5.4.7 Para. 2 Sentence 2 of the Code) and taking oneoff variable components tied to business success into consideration in the Board of Management’s remuneration (Section 4.2.3 Para. 2 Sentence 2 of the Code) is not currently implemented by AUDI AG, as the debate in specialist quarters as to the specific form to be
taken has still not yet reached a conclusion. The outcome of this debate is to be awaited.
The restriction moreover applies that the elections to the Supervisory Board do not take
the form of elections of individuals (Section 5.4.3 Sentence 1 of the Code). Elections by list
are a common practice in democratic elections. The following qualifications moreover apply
to the suggestions made in the Code:
The Annual General Meeting will not be broadcast on the internet (Section 2.3.4 of the
Code) in order not to infringe the privacy rights of individual shareholders. For this reason,
the provision for absent shareholders to contact the company’s proxy exercising voting
rights (Section 2.3.3 Sentence 3, 2nd half of sentence of the Code) even during the Annual
General Meeting is not necessary.
Particulars pursuant to
No notifiable acquisition and sale transactions were carried out in the past financial year.
Section 6.6 of the Code
Stock option schemes and
similar securities-based
incentive arrangements
AUDI AG does not offer any such schemes or incentive arrangements.
System of remuneration
The basic principles of the system of remuneration for the members of the Board of Management are described in detail in the Notes to this Annual Report, under “Details of the
Supervisory Board and Board of Management”. This information is also available on the
company’s website (www.audi.com/notes).
Internet declaration on the
Code
The joint declaration of the Board of Management and Supervisory Board of AUDI AG on the
recommendations of the German Corporate Governance Code was placed on the Audi website (www.audi.com/cgk-declaration) on December 6, 2006.
126
Audi shares
Stock market
developments
Whereas most stock markets made a lively start to 2006, they experienced a sharp slump in
the second and third quarters. This bear market was driven in particular by growing fears of
higher interest and inflation rates, rising raw materials prices and political instability in the
Middle East. Following a phase of stabilisation, international stock markets recovered to
reach new record highs towards the end of the year. This positive development was underpinned by robust global economic growth, healthy financial performances in the corporate
sector and interest rates remaining low compared with the long-term average. The German
Share Index (DAX) mirrored the development of international stock markets. It initially
touched a year-low of 5,243.71 points in June 2006 after having started the year on 5,410.24
points. It then rallied to close the year on 6,596.92 points. The Prime Automobile, the sector
index for German automotive shares, likewise finished 2006 with high growth rates. It closed
the year on 569.60 points, having gained 24 percent overall in the course of the year, which
it had started on 459.22 points.
Audi share price trend
The development in the AUDI AG share price represented an impressive gain in value. The
shares started 2006 on EUR 308. After an initial sideways shift lasting until mid-way through
the year, they soared to a record-high of EUR 587 in the second half. They closed 2006 on
EUR 540, having gained in value by 75 percent. The past financial year was the first occasion
on which AUDI AG shares were included in the studies of leading analysts. The decidedly
successful progress of the Audi Group and the anticipated future successes fuelled by
Strategy 2015 resulted in the securities being emphatically recommended as a “buy”. This
recommendation naturally also had a positive influence on the price of Audi shares.
Profit transfer and
compensatory payment
for shareholders
There exists a control and profit transfer agreement between AUDI AG and Volkswagen AG,
which controls around 99 percent of the share capital of the former. Instead of a dividend
payment, the outside shareholders receive a compensatory payment. The level of this payment is equivalent to the dividend paid on one Volkswagen AG ordinary share for the same
financial year, as will be determined by the Annual General Meeting on April 19, 2007.
Audi share price trend
(ISIN: DE0006757008, German Securities Identification Number (WKN): 675700)
EUR
2003
2004
2005
2006
600
500
400
300
200
100
0
Highest
Year-end price
Lowest
127
Management Report of the Audi Group
for the 2006 financial year
Business and underlying situation
The Group
Company
As a manufacturer of high-quality, innovative cars, Audi is one of the world’s leading premium brands and is among the most admired on the world market. The basis of its success
comprises pioneering concepts in the domains of company management and advanced
technological development. The high expectations of its customers serve as the catalyst of a
continuing quest to find ever better solutions. Within the brand essence “Vorsprung durch
Technik”, this is expressed through the brand values sportiness, sophistication and progressiveness, which are thus manifestations of the Audi brand philosophy.
The customer experiences these values through the diverse range of models that enabled the Audi Group to expand on global car markets yet again in 2006, and thus further
strengthen its position.
Sales of Audi vehicles by market
2006
Share in %
Germany
257,792
28,5
Europe excluding Germany
400,671
44,3
USA
90,116
10,0
China
81,708
9,0
Other
74,901
8,2
Total
905,188
100,0
Group structure and principal group companies
The headquarters of the Audi Group, with the core areas Technical Development, Sales and
Administration, along with substantial parts of the production operations, are located in
Ingolstadt. The A3, A3 Sportback, A4 saloon and Avant, S4 saloon and Avant models and
also the bodyshells for the TT Coupé and TT Roadster are manufactured there.
The A6 saloon, Avant and allroad quattro, S6 saloon and Avant, A8, A8 W12, and S8 models are built at the second German plant in Neckarsulm. quattro GmbH, likewise based in
Neckarsulm, is a manufacturer of the RS range of high-performance vehicles and built the
RS 4 saloon and Avant models in the past financial year. This fully owned subsidiary of AUDI
AG has in addition been building the Audi R8 since autumn 2006; the new model will go on
sale in 2007. This thoroughbred mid-engined sports car is assembled on a high-quality craft
scale, creating a new landmark in the history of the Audi Group. The product range of quattro GmbH in addition includes an extensive customisation range (e.g. S line, exclusive line)
for all Audi models, as well as sophisticated lifestyle articles associated with the Audi brand.
AUDI HUNGARIA MOTOR Kft. develops and builds engines for AUDI AG, other Volkswagen
Group companies and third parties at Győr, Hungary. Production of the TT Coupé and TT
Roadster furthermore takes place there. This company has also had its own toolmaking
shop since 2005. AUDI HUNGARIA MOTOR Kft. has emerged as one of Hungary’s largest
exporters and highest-revenue enterprises.
128
Automobili Lamborghini S.p.A., located in the Bologna region, Italy, builds the extreme
and uncompromising super sports cars Gallardo Coupé, Gallardo Spyder, Murciélago LP640
Coupé and Murciélago LP640 Roadster.
AUTOGERMA S.p.A., a subsidiary of Automobili Lamborghini Holding S.p.A. and based in
Verona, sells vehicles of the Audi brand and of the other Volkswagen brands in Italy.
Main companies within the Audi Group
AUDI AG
AUDI HUNGARIA
MOTOR Kft.
Automobili Lamborghini
Holding S.p.A.
Automobili Lamborghini S.p.A.
Lamborghini ArtiMarca S.p.A.
MML S.p.A.
AUTOGERMA S.p.A.
quattro GmbH
Principal sales
subsidiaries
(fully consolidated)
Audi Australia Pty Ltd.
Audi Brasil Distribuidora de Veículos Ltda.
Audi Japan K.K.
Audi Vertriebsbetreuungsgesellschaft mbH
Audi Volkswagen Korea Ltd.
Audi Volkswagen Middle East FZE
The Group
Volkswagen AG, which currently controls around 99 percent of the share capital of AUDI AG,
is the major shareholder. A profit transfer and control agreement exists between the two
companies. Volkswagen includes the consolidated financial statements of AUDI AG in its
own consolidated financial statements.
Profit transfer agreements have been agreed between AUDI AG and the principal subsidiaries Audi Vertriebsbetreuungsgesellschaft mbH and quattro GmbH.
The following changes to the Audi Group occurred in the past financial year:
The fully consolidated companies Audi Synko GmbH and Audi Zentrum Hannover GmbH, as
well as Audi Zentrum Stuttgart GmbH & Co. KG, which was accounted for using the equity
method, have been withdrawn from the group. In order to implement the brand and exclusivity strategy at Audi’s own dealerships, Audi Retail GmbH was established. A profit transfer agreement, which remains to be ratified by the 2007 Annual General Meeting, exists
between AUDI AG and Audi Retail GmbH.
AUTOGERMA S.p.A. was renamed VOLKSWAGEN GROUP ITALIA S.P.A. with effect from
January 1, 2007.
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Additional disclosures pursuant to Section 315 Para. 4 of the German Commercial Code
On the introduction of the German Takeover Directive Implementation Act on July 14, 2006,
Directive 2004/25/EC of the European Parliament and Council of April 21, 2004 on takeover
bids (“EU Takeover Directive”) was implemented in German law. The law envisages among
other aspects changes to the German Commercial Code and necessitates additional particulars in the Management Report, which are provided below:
Capital structure
On December 31, 2006 the share capital of AUDI AG amounted to EUR 110,080,000
(110,080,000) and comprised 43,000,000 bearer individual share certificates. Each share
represents a mathematical share of EUR 2.56 in the issued capital.
Shareholders’ rights and obligations
The shareholder has property and administrative rights.
The property rights include above all the right to a share in the profit (Section 58 Para. 4
of German Stock Corporation Law) and in the proceeds of liquidation (Section 271 of German Stock Corporation Law) as well as a subscription right to shares in the event of capital
increases (Section 186 of German Stock Corporation Law).
The administrative rights include the right to participate in the Annual General Meeting
and the right to speak, ask questions, table motions and exercise voting rights there. The
shareholder may assert these rights in particular by means of a disclosure and avoidance
action.
Every share shall carry an entitlement to one vote at the Annual General Meeting. The
Annual General Meeting shall elect the members of the Supervisory Board to be appointed
by it, as well as the auditors; it shall decide in particular on the discharge of the members of
the Board of Management and the Supervisory Board, on amendments to the articles of
incorporation as well as capital measures, on authorisations to acquire treasury shares and,
if necessary, on the conducting of a special audit, the dismissal of members of the Supervisory Board within their term of office and the liquidation of the company.
The Annual General Meeting shall normally pass resolutions by a simple majority of
votes cast, unless a qualified majority is specified by statutory requirements.
A control and profit transfer agreement exists between AUDI AG and Volkswagen AG as
the controlling company. This agreement permits Volkswagen to issue instructions. The
unappropriated profit of AUDI AG available for distribution shall be transferred to Volkswagen. Volkswagen AG shall be obliged to make good any loss. Outside Audi shareholders
shall receive a compensatory payment that is tied to the dividend distributed on each
Volkswagen share.
Composition of the Supervisory Board
The Supervisory Board shall comprise 20 members. Half of them shall be representatives of
the shareholders, elected by the Annual General Meeting. The other half of the Supervisory
Board members shall be employees’ representatives who are elected by the employees in
accordance with German Codetermination Law. A total of seven of these employees’ representatives shall be employees of the company; the remaining three Supervisory Board
members shall be representatives of the unions. The Chairman of the Supervisory Board, a
shareholders’ representative elected by the members of the Supervisory Board, shall ultimately have two votes on the Supervisory Board in the event of a tied vote, pursuant to
Section 13 Para. 3 of the articles of incorporation.
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Statutory requirements and provisions under the articles of incorporation on the
appointment and dismissal of members of the Board of Management and on the
amendment of the articles of incorporation
The appointment and dismissal of members of the Board of Management are laid down in
Sections 84 and 85 of German Stock Corporation Law. Members of the Board of Management are accordingly appointed by the Supervisory Board for a period of no more than five
years. Reappointment or an extension of the term of office, in each case for no more than
five years, shall be permitted. Section 6 of the articles of incorporation moreover stipulates
that the number of members of the Board of Management shall be determined by the Supervisory Board and that the Board of Management must comprise at least two persons.
Key agreements by the parent company that are conditional on a change of control
following a takeover bid
AUDI AG has not reached any key agreements that are conditional on a change of control
following a takeover bid. Nor has any compensation been agreed with members of the
Board of Management or employees in the event of a takeover bid.
Corporate steering
Strategy
The management of the Audi Group is systematically focusing its business activities on the
objective of establishing Audi as the most successful premium brand in the world by 2015.
The 2006 financial year consequently again saw the development of a detailed set of measures designed to ensure that the defined milestones along this ambitious path are reached.
There are four strategic objectives that serve as the cornerstone measures:
Audi – the most successful premium brand
Substantial rise
in profitability
Customer enthusiasm and
image leader for emotion
and quality
Most attractive
employer
Volume growth to
1.5 million vehicles
The underlying conviction behind the strategic pillar of being the most attractive employer
on the market is that the company needs to engender long-term loyalty in its expert, dedicated employees. One means of achieving this is to propagate an outstanding external image as an employer. The central aim is also to offer a context in which a highly motivated
team is permanently able to keep developing. A highly motivated workforce will also reap
rewards in monetary terms: the employees’ performance-dependent profit share was reorganised in 2005 to make it even more attractive.
Only with such a high-performing team can the fascinating cars of the Audi brand be developed and built to the exacting standards that customers expect. Representative surveys
confirm that the products themselves are one of the key driving forces behind a brand’s
image and prestige rating. Particularly at times of growing competition, having as strong
and desirable a brand as possible provides the basis for sustained success. The aim for the
next few years therefore remains to continue strengthening the image position of the Audi
brand worldwide. The Audi Group again made good progress in that respect in 2006. The
brand’s sporty credentials are underlined by the historic victory of the new R10 TDI in the Le
Mans 24 Hours, where it won the overall standings with the first racing car ever to be powered by a diesel engine. The A3, A6 and A8 each came top of their respective categories in
the reader poll staged by the major German motoring magazine auto motor und sport. In
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AUTO ZEITUNG’s “Auto Trophy 2006” poll, Audi actually scooped four of the coveted awards
with its A3, A6, A8 and R8 models. The international press likewise showered awards on
Audi vehicles. In the United Kingdom – one of the Audi brand’s most important export markets – the Audi brand was even recently voted “Brand of the Year”. The high quality of Audi
vehicles is reflected for instance in the first place achieved in the J.D. Power Asia Pacific
study.
As part of its goal to become the most successful premium manufacturer, the Audi
Group has moreover set itself the target of selling over 1.5 million vehicles by 2015. New
product families and derivatives are consequently being added to the existing model range.
The market launch of the Audi Q7 and the unveiling of the R8 super sports car are the first
manifestations of this product initiative. The company is simultaneously focusing specifically on new markets: growth markets such as India are being purposely developed early on.
The brand with the four rings is already represented there by imported models. From autumn 2007, locally built vehicles will moreover be available. The company likewise continues
to invest in established growth markets such as China in order to further extend the Audi
brand’s market lead in the premium segment.
The company bases its growth strategy in the first instance on qualitative, sustained
growth. Alongside attaining ambitious volume targets, improved profitability is therefore at
the heart of the strategy. This can be achieved above all by the ongoing analysis and enhancement of all corporate processes. One measure that particularly helps to boost longterm profitability is the modular longitudinal toolkit, which ensures that future vehicle projects are implemented flexibly and cost-effectively. As well as implementing efficient cost
management measures, the company uses systematic investment management in order to
make optimum use of the available financial resources.
Internal steering system
The return on investment (RoI), which makes it possible to evaluate the return on the capital
employed for different types and sizes of investment project, is used as an instrument of
internal steering within the Audi Group. It thus permits an assessment of the development
in a company’s profitability and is calculated according to the following formula:
Return on investment (RoI) =
operating result after tax
invested assets
x 100
The average effective tax rate for the group is assumed to be 35 percent for the purpose of
calculating the operating result after tax, based on the varying tax rates for the companies
that make up the group.
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EUR million
2006
2005
Operating result before tax
2,015
1,407
705
492
– Tax (35 %)
= Operating result after tax
1,310
915
11,575
11,608
– Non-interest-bearing liabilities
2,321
2,150
= Invested assets
9,254
9,458
14.2
9.7
Average operating assets
Return on investment (in %)
For the 2006 financial year, the Audi Group achieved a return on investment of 14.2 percent.
Audi has therefore easily exceeded its long-term target of ten percent for the first time and
this figure consequently now places it among the leaders in the car industry.
System of remuneration for the Supervisory Board and Board of Management
Information on the system of remuneration for the Supervisory Board and Board of Management is provided in the Notes to the Consolidated Financial Statements under “Details of
the Supervisory Board and Board of Management” on pages 203 to 205.
Research and development
The Audi Group lives up to its brand identity “Vorsprung durch Technik” in particular by
systematically bringing innovations to product maturity.
The employee total in the Research and Development area averaged 5,946 (5,653) employees over the year, comprising 5,717 (5,419) at AUDI AG, 99 (93) at AUDI HUNGARIA
MOTOR Kft. and 130 (141) at Automobili Lamborghini S.p.A.
Research and development expenditure recognised as an expense
EUR million
2006
2005
Research expenditure and development expenditure not recognised as an intangible asset
1,077
999
Amortisation and disposals of development expenditure
recognised as an intangible asset
905
586
Total research and development expenditure recognised
as an expense
1,982
1,585
Technical innovations
Engines for the future: 1.8 TFSI and 2.8 FSI
The new 1.8 TFSI engine develops 118 kW (160 bhp) and generates up to 250 Newton-metres
of torque. It constitutes the basis of a completely new consumption-optimised family of
engines. The engine is designed for worldwide use and in particular to meet all known
emission limits.
The 2.8-litre FSI engine has an output of 154 kW (210 bhp) and 280 Newton-metres of
torque. In addition to FSI petrol direct injection, this V6 engine is the first to incorporate the
innovative Audi valvelift system. This intelligent system of actuation directly by the camshafts cuts petrol consumption by as much as ten percent and boosts low-end torque, simultaneously enhancing driving fun quite appreciably.
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V8 FSI mid-engine in the Audi R8
The evolution of FSI petrol direct injection has reached a new high point with the V8 FSI midengine. The high-revving engine of the Audi R8 develops 309 kW (420 bhp) from a swept
volume of 4.2 litres, generates 430 Newton-metres of torque and accelerates the super
sports car from 0 to 100 km/h in 4.6 seconds.
LED headlights for the Audi R8
The Audi R8 will become the first production car with all main headlight functions (lowbeam headlights, high-beam headlights, daytime running lights, turn indicators) available in
LED technology. The marked advantages compared with conventional headlights include a
significantly longer operating life and, above all, greater flexibility in automotive design.
All-aluminium body of the Audi R8
An Audi Space Frame serves as the supporting structure for the all-aluminium body. With its
perfect blend of low weight and extremely high rigidity, it provides the basis of superior
handling characteristics coupled with outstanding crash behaviour. The entire body weighs
only 272 kilograms – and is therefore around 20 percent lighter than conventional designs.
V12 TDI – an international sensation in the Audi Q7
The world’s most powerful diesel engine for a passenger car was unveiled in the Audi Q7,
and will soon go into production. In the roadgoing version derived from the Le Manswinning R10, the 12-cylinder diesel unit develops 368 kW (500 bhp) and 1,000 Newtonmetres of torque, and accelerates from 0 to 100 km/h in only 5.5 seconds. The average fuel
consumption over the overall cycle is 11.9 litres.
®
Audi TDI with “Bluetec ”
®
Audi is launching Bluetec technology in the American market in 2008 via a partnership with
Volkswagen and DaimlerChrysler, with a view to increasing the popularity of its highperformance but economical diesel models in the USA. The aim is to demonstrate the advantages of modern diesel technology to consumers in the USA, too. These innovative emissions treatment systems from Audi involve injecting an aqueous urea solution into the exhaust system in small amounts, thus extensively reducing emissions of harmful nitrogen
oxides. This enables the diesel engines to meet the strict US emission standards in all US
states. The Audi Q7 V6 TDI will be the first model to feature this advanced technology.
Audi photomix detectors
In systematically pushing forward with the development of photomix detector technology
(PMD) Audi Electronics Venture GmbH, a fully owned subsidiary of AUDI AG, in conjunction
with PMDTechnologies and Harman/Becker, is making a major contribution towards improving safety standards in road traffic. This emerging technology helps a vehicle to “see spatially” and thus actively and rapidly respond to hazards such as sudden obstructions or
drifting out of the lane. It is virtually unaffected by direct sunlight and also functions in the
dark, thanks to a light source that emits invisible infrared light ahead of the vehicle. The
light reflected by objects in front of the vehicle is then picked up by a PMD sensor and used
to generate a three-dimensional image. Thanks to the high speed of light, this is achieved
with a precision of 6.6 billionths of a second. Photomix detectors could also be used for
occupant protection and in intelligent operating systems in vehicles in the near future.
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Innovations that bring greater safety
New generation of adaptive cruise control (ACC) in the Audi Q7
ACC represents an advance on the cruise control system and, subject to certain system
limits, can also maintain a preselected distance from the vehicle in front by means of a radar
sensor. As one of the first manufacturers to supply this system, Audi has launched a new
generation in the Audi Q7; it is capable of slowing down the premium SUV even to a standstill, and therefore covers the speed range below 30 km/h for the first time.
The braking function – another “first” in the Audi Q7 – is performed by an active brake
2
servo. It achieves deceleration of up to 4 m/s . The driver will find this feature convenient
particularly in slow-moving traffic and traffic jams. After the car has halted, the driver can
simply restart the system via the control lever, accelerating the car again in pace with the
traffic.
Innovative companion – braking guard in the Audi Q7
Braking guard, a brand new concept available in conjunction with adaptive cruise control
(ACC), met with considerable interest at the press presentation of the Audi Q7. The wheel
sensor constantly monitors the lane ahead of the Audi Q7, irrespective of whether ACC is
being actively used. If a vehicle braking abruptly or driving much more slowly is identified in
front of the Audi Q7, braking guard warns the driver initially by means of an optical-acoustic
signal. If the driver does not react, a brief brake jolt is triggered as a second-tier measure. In
test group studies this brake jolt proved an appropriate means of alerting inattentive drivers
with as little reaction time as possible lost, prompting them to apply the brakes hard with
the aid of brake assist. For safety reasons, however, the emergency stop is not prompted by
the system itself.
Employee matters
Workforce
Audi Group, average for the year
2006
2005
52,297
52,412
of which:
AUDI AG
44,701
44,902
Ingolstadt plant
31,276
31,236
Neckarsulm plant
13,425
13,666
5,204
5,046
Lamborghini Group*
720
725
AUTOGERMA S.p.A.
873
836
AUDI HUNGARIA MOTOR Kft.
* excluding AUTOGERMA S.p.A.
The Audi Group employed an average of 52,297 (52,412) people in 2006.
The workforce of AUDI AG remained on a par with the previous year at 44,701 (44,902)
employees. At AUDI HUNGARIA MOTOR Kft., the number of employees rose to 5,204 (5,046)
in particular as a result of the establishment of the toolmaking shop and the start of TT
production. The employee total for the Lamborghini Group (excluding AUTOGERMA S.p.A.)
was essentially unchanged from the previous year. The employee total at AUTOGERMA
S.p.A. rose by 4.4 percent above all as a result of recruitment in the areas of Sales, Marketing and Service.
135
The proportion of people with severe disabilities in relation to the total workforce of AUDI
AG was 5.2 (5.1) percent at the end of the year. Audi in addition awards contracts to “Lebenshilfe” workshops for the handicapped in the Ingolstadt and Neckarsulm regions. Employees at Lebenshilfe establishments perform such tasks as assembling shock absorbers and
gear lever trims for AUDI AG.
Attendance figures
in %
2003
2004
2005
2006
96.6
96.9
97.0
97.1
97.0
96.5
96.0
AUDI AG saw the attendance figures rise to 97.1 percent for 2006 as a whole. This result was
made possible by continuing improvements to workplace organisation and very many preventive health initiatives.
Strategic goal: Audi the most attractive employer
One of the pillars of the long-term corporate strategy is to be among the most attractive
employers on the market. The declared aim is to attract and hold onto the best people. Internal studies show how strong the bond is between the employees and the brand and
company. The mood barometer, a company-wide online survey within the company network,
is an important instrument of human resources work. The replies to ten questions gauging
the subjective response to the working environment are processed for each organisation
unit. Management and personnel departments can then deal with bottlenecks or problems
in a department swiftly and effectively. In 2006, around 80 percent of the workforce used the
Audi mood barometer.
The company’s internal appeal as an employer includes job security, commensurate pay,
a good internal atmosphere, an interesting location, the image of the products and company, an interesting area of activity – and of course clear development options for the employees. Audi consequently launched a large-scale pilot project on personnel development
for standard-wage employees in 2006. Its focus was on medium and long-term development
prospects and training opportunities for the workforce.
The company has moreover earned a place among the top-ranking companies in German
industry for employer appeal as perceived externally. Audi is one of the most sought-after
prospective employers in Germany for students of Engineering Sciences and Business Management.
New remuneration system: performance-related pay
2006 witnessed intensive preparations for the introduction of an entirely new remuneration
system for the standard-wage employees at the German locations. The company agreement
“Audi’s Future – Performance, Success, Sharing”, agreed by the negotiating parties two
years ago, envisaged the implementation of the remuneration framework agreement (ERA)
in 2007 – in conjunction with an employment guarantee and other aspects of attractiveness
such as better compatibility of family and work.
136
Key aspects of the ERA project are the reassessment of all activities within the company,
the emphasis placed on the performance component of pay and the abandonment of the
traditional distinction between blue-collar workers and white-collar staff. This offers better
development prospects for many employees. At the start of 2007, the Audi workforce of
around 45,000 at the two German plants will be allocated to the collectively negotiated pay
groups. ERA also creates greater transparency for the employees themselves: their pay is
broken down into a basic, a performance-related and (for certain production activities) a
physical strain component. There is in addition a so-called Audi component for all employees, above the blanket pay level.
Internationalisation
Around two out of three new Audi cars are sold outside Germany, with the tendency rising.
Anyone wishing to serve the needs of customers in another country has to know the people
and their customs. International personnel assignments have therefore become much more
widespread at Audi over the past few years. Whereas just under 100 employees were assigned to international locations in 1996, the total in 2006 was over 500. The main destinations for those sent on assignments were Hungary, the USA, China, Spain and Italy. Audi
employees are also being deployed in other up-and-coming markets such as Dubai and
South Korea. The nascent premium market in India will be added in the current year.
Foreign assignments are an important element in the professional and personal development of many Audi employees. From the company’s viewpoint, employees on an international assignment are ambassadors of the brand. They also acquire international skills as
well as cultural and market-specific knowledge that help the company to focus even more
accurately on its export markets’ requirements.
Training at Audi
AUDI AG employed a total of 2,231 (2,236) apprentices at the end of 2006. Of this total, 2,053
(2,061) were engaged in industrial activities and 178 (175) in the technical/clerical area. 694
young people started their training at the German locations in September 2006, in a total of
20 different vocations. These include the new vocation of “Technical Product Designer”,
which supplies the virtual basics for reconciling the diverging wishes of design studio, technology and workshop.
Audi has developed a special programme to ease the transition from vocational training
to the world of work: the personnel hub. On the one hand, it serves to broaden the specialist
and personal horizons of young employees at Audi, and, on the other hand, it enables the
company to respond flexibly to variations in the number of workers needed at its individual
locations. Employees are able to broaden their skills and talents at other group locations or
at external companies, for instance suppliers, for a period of up to 24 months. An additional
qualification that is specific to the job and company process is moreover acquired over the
two-year hub period.
As in the past, Audi offers the prospect of attractive, secure employment to young people
who have completed their training at the company. The hub concept promotes the development of skills, mobility and flexibility among young adults. Around 850 Audi employees
participated in the personnel hub in 2006.
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Audi in society
Research partnerships
Audi started to place its partnership with universities on a new footing in 2003. The first step
was the joint project INI.TUM between the Technical University of Munich, in which the city
of Ingolstadt is also involved. The purpose of this partnership is to foster the transfer of
knowledge between basic research and industrial application. Doctoral projects that closely
match the current research and development requirements of the Audi Group as an innovative car manufacturer are chosen by a steering group in which each partner has equal representation. The advantage for those involved is that the students gain an insight into the
world of industrial development and production, the universities secure outside funding for
their research, and Audi in return obtains ideas on how to solve topical problems in the
spheres of production technology, mechanical engineering and information technology.
Close contact between the researchers and the Audi locations is an essential aspect of the
partnerships. As well as practical application by the company remaining squarely in the
foreground, the participants are also able to become well acquainted with each other.
Following the successful example of INI.TUM, Audi has entered into other partnerships,
including the “Institute for Applied Research” with the Ingolstadt University of Applied Science and the Neckarsulm Technical Institute (HIN) involving the Universities of Stuttgart and
Karlsruhe. These were followed in 2006 by agreements with the Friedrich Alexander University of Erlangen-Nuremberg (INI.FAU) and the Technical and Economics University of Budapest (Audi Hungaria Institute AHI).
Two of the universities with which Audi is associated are in the cluster of excellence created by the Federal Ministry of Education and Research: the University of Karlsruhe and the
Technical University of Munich. Within the Initiative for Excellence, Friedrich Alexander University, Erlangen, was declared a “Graduate School for the Furtherance of Junior Researchers”.
By the end of last year, Audi was sponsoring 54 doctoral projects from its partnerships
with German universities alone, seven projects with the Ingolstadt University of Applied
Science and a further seven in Hungary. The company has in addition filled around 30 doctoral projects internally.
Location-specific partnerships
Away from research projects, Audi maintains an in-depth partnership with the city of Ingolstadt in the areas of tourism and transport management. For example, the “Travolution”
project has the objective of developing an efficient, dynamic traffic control system using
complex computing methods in traffic light systems and vehicles.
An internet portal developed jointly by Audi, Ingolstadt Tourismus und Kongress GmbH
and other partners (www.living-ingolstadt.de) has been online since the start of 2006. Audi
attaches considerable importance to developing Ingolstadt as a tourist centre. In 2006
alone, around 40,000 new cars were collected from the Audi Forum Ingolstadt by visiting
customers. With an average of 2.5 visitors per vehicle, the brand with the four rings thus
brought around 100,000 people to Ingolstadt last year solely for that purpose.
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Environmental aspects
Environmental management
Sustainable management is an integral component of the Audi Group strategy and strives to
reconcile environmental protection with innovations. Through its pioneering technical innovations, the Audi Group is contributing towards major advances in protecting the environment and displays the European Union’s symbol of environmental excellence. This gives
customers the reassurance that optimum environmental compatibility was heeded in the
manufacturing of their vehicle, alongside such aspects as durability, quality and safety.
Environmental protection organisation of the Audi Group
Coordinating Committee for Environmental Protection
Steering Committee
for Ecology
AUDI AG
Production plants:
Ingolstadt,
Neckarsulm
(Germany)
Environmental
Management Officer
AUDI HUNGARIA
MOTOR Kft.
Production plant:
Győr (Hungary)
Environmental
Management Officer
Automobili Lamborghini
Holding S.p.A.
Production plant:
Sant´Agata Bolognese
(Italy)
Work group: End-of-Life Vehicles
Work group: Sustainability
Work group: Environmental Report
Work group: Environmental Management
Work group: IPP
The Audi Group is among the pioneers of location-based environmental protection both in
Germany and internationally.
AUDI AG for example covers up to 95 percent of the overall water requirements of its
production facilities at Ingolstadt within a closed cycle and conducts analyses to verify that
the specified limit values for waste water are complied with. A modern, ultra-efficient emulsion evaporation plant for the physical treatment of the emulsions and wash water arising at
the location was moreover opened in March 2006. This cut such components as the transport costs for their disposal by around 70 percent.
A new waste water treatment plant in which process water is purified was opened at
Neckarsulm. This investment, costing EUR 3.7 million, significantly boosted the output of
the central industrial waste water treatment plant. Saving energy at engine test rigs at
Neckarsulm furnishes another example. At the new engine test rig centre, the electrical
energy that is generated by the electric machines during testing of the internal combustion
engines is used to cover the energy requirements of the building’s technical facilities in full.
This represents an efficient form of energy recovery.
Complex recycling management arrangements also now help to avoid waste at AUDI
HUNGARIA MOTOR Kft. in Győr, Hungary. Recycling management includes for instance
comprehensively checking the waste that arises until it reaches the point of its re-use, and
the delivery of components in returnable packaging. Predominantly emissions-free cold
tests are used as a means of minimising the environmental impact of developing and testing engines. The recovery of heat means that the waste air from the production halls serves
as an additional source of energy.
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Automobili Lamborghini S.p.A., the Italian manufacturer of high-performance sports cars,
likewise reconciles technology with ecology. Automobili Lamborghini S.p.A., a low-volume
manufacturer, maintains the same high safety and emissions standards as large-volume
manufacturers.
Emissions trading
Climate change and energy efficiency are the key environmental issues of our age. The
European Union has therefore adopted a pioneering role in the field of climate protection
and introduced trading of CO2 emissions rights on January 1, 2005. The Audi plants at Ingolstadt and Neckarsulm participate in this emissions trading system.
Thanks to measures to increase energy efficiency and the targeted reduction of energy
consumption, both plants are achieving a positive overall balance between the emissions
rights issued to them and their anticipated CO2 emissions in the first trading period (2005 to
2007). A surplus of emissions rights from the first two reporting years was sold in 2006.
Environmental Pact for Bavaria III
AUDI AG is participating in the third phase of the Environmental Pact for Bavaria, which
focuses on boosting innovativeness and promoting environmentally acceptable economic
growth. Through its involvement in the working forums within the Environmental Pact for
Bavaria, AUDI AG is helping to create incentives for environmentally acceptable economic
growth and is thus contributing towards the pact’s success. The Ingolstadt plant is involved
in various projects on Integrated Product Policy (IPP).
According to the IPP principle, AUDI AG adopts a holistic view of all phases of the product life-cycle, from raw materials extraction to disposal. IPP furthermore enables AUDI AG to
tie suppliers systematically into the sustainable production process.
Fall in environmental pollution at group locations
Even considering the welcome rise in production, the overall energy consumption of the
Audi Group was kept stable.
The painting of vehicles during the production process is of particular environmental
relevance. In 2006, the paint shop at Ingolstadt was therefore further automated. The resulting improvement in the way paint is applied to bodies helped to cut paint consumption per
vehicle by around ten percent and thus also reduced solvent emissions further.
Detailed notes on environmental aspects can be found on the internet, in the Audi Environmental Report at www.audi.de/umwelt, and in the environmental declarations as well as
on the group portal at www.volkswagen-sustainability.com.
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Development in overall energy consumption, vehicle and engine production by the Audi Group
1)
2003
2004
2005
2006
732
745
765
826
Engine production
(‘000 units)
1,343
1,486
1,695
1,896
Overall energy consumption
(GWh)
2,070
2,114
2,139
2,156
2,400
2,000
1,600
1,200
800
400
0
Vehicle production 2)
(‘000 units)
1) Ingolstadt, Neckarsulm, Győr and Sant’Agata Bolognese plants
2) excluding Audi A4 Cabriolet, RS 4 Cabriolet, Audi Q7 and aspects of the A3 production
Underlying economic
situation
Global economic situation
The global economy maintained its dynamic growth in 2006. The upswing was broad-based,
because, in addition to the continued expansion of national economies in Asia and the USA,
Western European countries enjoyed substantial economic growth. The global upturn was
held back by rising interest rates and persistently high raw materials prices. The further rise
in the price of oil in the course of the year nevertheless did not hold back the economy to
the same extent as in previous periods.
The economy in the USA cooled down slightly after a very lively start to the year. Higher
interest rates, rising petrol prices and the marked weakening of the real estate sector undermined private demand. With overall growth for the year running at 3.4 (3.2) percent,
economic output was, however, up on the prior-year level.
In Western Europe, economic development was vigorous compared with the previous
year. The eurozone experienced growth of 2.6 (1.4) percent, and the United Kingdom
2.7 (1.9) percent. This positive development in Western European countries was due, on
the one hand, to higher exports and, on the other hand, to increased domestic demand,
which played a key role in stimulating corporate investment. There was, moreover, mild
growth in consumer spending, thanks to the improved health of the labour market. The
sharp economic upswing in Central and Eastern Europe continued.
The German economy enjoyed its highest growth rate for six years in 2006, at 2.5 (0.9)
percent. The key factor here, apart from exports, was increased domestic demand for capital
goods. Private consumption, on the other hand, rose only moderately. The improved situation on the labour market was offset by the stronger upward trend in prices above all for
energy, eroding households’ real incomes.
141
Economic expansion in the countries of Latin America was robust. Domestic demand was
the principal driving force behind growth in most countries. As an exporter of raw materials,
the region furthermore benefited from the sharp rise in raw materials and energy prices on
the world markets.
The Asia-Pacific region remained economically dynamic. Whereas the pace of growth
slowed down somewhat towards the middle of the year in some emerging countries, the
Chinese economy continued to expand at a high pace, growing by 10.7 (10.4) percent. The
modest expansion in Japan continued, though momentum slackened off somewhat in the
course of the year. The growth rate for gross domestic product was slightly up on the previous year, at 2.1 (1.9) percent.
International car market
Despite the sharp rise in fuel prices in 2006, worldwide demand for passenger cars was up
2.8 percent on the previous year at 54.6 million passenger cars, representing a new all-time
record. The driving forces behind this growth were primarily the car markets in China and
India, as well as Russia and Brazil. Demand for passenger cars in Western Europe, Japan
and the USA, on the other hand, remained flat or was slightly recessive.
The Western European car market (excluding Germany) experienced a sideways shift in
2006. The figure of 11.2 million passenger cars registered as new was 0.2 percent down on
the prior-year total. There was a marked downturn in certain high-volume markets. For example, the volume of newly registered cars in the United Kingdom and France fell by 3.9 and
3.3 percent respectively. The growth trend in Spain was likewise halted for the first time in
many years, with passenger car sales yielding by 2.0 percent. On the other hand, the Italian
car market helped to stabilise the overall situation, growing by a notable 4.0 percent.
Registrations of new cars in Central and Eastern European countries rose by 19.8 percent
to 3.2 million vehicles. The Russian market in particular benefited from steep economic
growth and was 26.6 percent up on the previous year, with 1.7 million passenger cars registered as new.
In the US car market, the fuel price increases during the year under review dampened
vehicle sales. Market activity continued to be dominated by intensive sales incentives, which
did not suffice to reverse the negative trend. Unit sales of cars consequently fell by 2.6 percent to 16.6 million.
The upward trend on car markets in South America gathered pace along with the expansion of the economy. In Brazil, passenger car sales rose by 13.6 percent to almost 1.6 million
vehicles, and the market in Argentina expanded by 16.1 percent.
The Asia-Pacific region was again the main driving force behind the worldwide car market in 2006. Unit sales totalled 13.3 million passenger cars, representing a rise of 6.4 percent. The Indian car market exceeded one million units for the first time, with just over 1.0
million vehicles sold – an increase of 15.4 percent. The car boom in China continued. The
overall market volume was in the order of 4.2 million passenger cars sold, up 26.1 percent
on the prior-year figure. By contrast, registrations of new cars in Japan fell by 2.2 percent to
4.6 million vehicles.
142
The German car market
The German car market experienced very mixed fortunes in the course of the year, and there
were sharp fluctuations in the month-by-month registration totals. Towards the end of the
year, the prospect of a rise in the VAT rate on January 1, 2007 became noticeable, with private customers bringing forward vehicle purchases, particularly during November and December; this prompted a marked acceleration in demand for passenger cars. New registrations of vehicles in Germany totalled around 3.5 million, representing an increase of 3.8
percent.
Following a downturn in sales in the previous year, diesel models came back into favour
with buyers in 2006. The diesel share of total first-time registrations rose by 1.6 percentage
points to 44.3 percent. This development was prompted in particular by the broader range
of models with diesel particulate filters.
Domestic car production grew, not least because of the rise in demand from abroad.
With 5.4 million vehicles built, German manufacturers bettered the previous year’s total by
0.9 percent. The number of German-branded cars built abroad was 12.2 percent up on the
previous year, at 4.7 million units.
German manufacturers again improved on the previous year’s record-breaking car exports. 3.9 million passenger cars, an increase of 2.6 percent, were exported. The countries of
Western Europe were the most important sales region; in view of the weaker market development in those major markets, the 2.4 million cars supplied to those markets was down 3.6
percent on the previous year. On the other hand, new models gave a boost to exports to the
USA. Around 555,000 German-built cars were sold in the United States, a gain of 1.6 percent.
Overall assessment by the management
Competition in the car sector gained in intensity in 2006. The rising cost of mobility, driven
primarily by higher fuel prices, dented vehicle sales in many car markets. Meanwhile, higher
prices for raw materials and energy created greater pressure of costs at the procurement
end.
In order to safeguard and boost competitiveness in the long term, the Audi Group is
working towards securing a lasting improvement in its own productivity. In an effort to realise ongoing advances in productivity, the company is concentrating first and foremost on
refining its established, successful approach to product, process and cost management.
The success of the measures taken is reflected in the new record figures for production,
unit sales and revenue for the past financial year. The substantial rise in earnings figures
supplies impressive evidence of the qualitative growth of the Audi Group and of the sustainability of the measures taken.
143
Business progress
Procurement
The purchasing operations of the Audi Group strive to establish lasting relations with the
world’s most efficient suppliers in terms of quality, reliability, innovativeness, service, price
and overall economy.
This is done in close cooperation with VW Group Procurement in order to make optimum
use of synergy potential.
The cost of materials within the Audi Group amounted to EUR 21,627 (19,139) million in
2006. This includes all raw materials and consumables used as well as purchased goods and
services.
Breakdown of the consolidated cost of materials by group company
16.8 %
Other group companies
67.5 %
AUDI AG
15.7 %
AUDI HUNGARIA MOTOR Kft.
Procurement was faced with major challenges in the past financial year as a result of the
considerable price rises for raw materials and energy. The financial impact on overall earnings was largely cushioned in particular through intensive collaboration with the partners in
the supply industry. Meanwhile, inventory control and capacity management came under
closer scrutiny as a result of last year’s rise in production volume.
The Audi Group prepared the way for its ambitious growth strategy by selecting specific
suppliers for the future volume to be procured for new projects.
As a reflection of its increasingly close ties with the supply industry, the Audi Group
staged a Supplier Meeting for both existing and new partners. The outcome was a common
basis for tackling future projects, taking account of the challenges that the procurement
market is likely to present. This basis depends on intensive collaboration with partners in
the supply industry early on in the product development phase. This development has been
supported by increased use of the B2B supplier platform during the past year, decisively
improving communication between AUDI AG and its suppliers.
144
Production
Vehicle production by model
2006
2005
Audi A2
–
10,026
Audi A3
69,813
70,395
159,581
150,091
21,461
8,368
Audi A3 Sportback
Audi TT Coupé
Audi TT Roadster
2,214
3,939
Audi A4 saloon
165,139
157,310
Audi A4 Avant
142,027
155,620
Audi A4 Cabriolet
27,735
22,076
Audi RS 4 saloon
4,384
544
Audi RS 4 Avant
2,666
12
Audi RS 4 Cabriolet
589
13
Audi A5 Coupé
487
10
Audi A6 saloon
150,901
131,344
Audi A6 Avant
70,430
73,334
Audi A6 allroad quattro
11,838
4,295
Audi Q7
72,188
1,194
Audi A8
22,468
21,509
Audi R8
Total, Audi brand
Lamborghini Gallardo
Lamborghini Murciélago
Total, Lamborghini brand
Total, Group
164
6
924,085
810,086
1,651
972
444
464
2,095
1,436
926,180
811,522
The Audi Group stepped up production to 926,180 (811,522) vehicles in 2006. This represents
an increase of 14.1 percent and marks a new all-time production record for the company.
The production total comprised 924,085 (810,086) Audi vehicles and 2,095 (1,436) sports cars
of the Lamborghini brand.
High demand for the A3 Sportback resulted in a 6.3 percent rise in production output to
159,581 (150,091) units.
The new Audi TT Coupé was launched in September 2006. This model, built jointly by the
Ingolstadt and Győr (Hungary) plants, is available with a four-cylinder petrol engine featuring innovative TFSI technology or a V6 petrol engine with quattro drive as standard. By the
end of December, the production total for the TT Coupé had already reached 21,461 (8,368)
units. The TT Coupé was followed by the production launch of the new TT Roadster at the
end of the year.
Thanks to high demand, 307,166 (312,930) units of the Audi A4 (saloon and Avant) were
built last year. Production of the new Audi A4 Cabriolet in its first full year in production rose
by 25.6 percent to 27,735 (22,076) units. A total of 7,639 (569) of the RS 4 model family (saloon, Avant and Cabriolet) were built in the 2006 financial year.
As part of the preparations for the production start of the new Audi A5, 487 (10) of this
coupé were already built during the past year.
145
The Neckarsulm plant manufactured 233,169 (208,673) units of the A6 car line last year.
As well as the saloon and Avant, the A6 allroad quattro and the S6 have been in production
there since 2006.
In its first full year in production, the Audi Q7 premium SUV exceeded all expectations.
72,188 (1,194) units of this model were built by the end of the year. The daily production
capacity was already stepped up from 200 to 300 units shortly after this model’s launch, in
response to high demand.
22,468 (21,509) deluxe saloons of the Audi A8 series were built at the Neckarsulm plant
during the past financial year. This surpassed the previous year’s high total by 4.5 percent.
Mid-way through the year, the ultra-sporty Audi S8 version joined it on the market, adding
impetus to demand for the car line.
Engine production
Audi Group
of which AUDI HUNGARIA MOTOR Kft.
of which Automobili Lamborghini S.p.A.
2006
2005
1,895,695
1,695,045
1,893,600
1,693,609
2,095
1,436
In the past financial year, the Audi Group increased engine production to a total of 1,895,695
(1,695,045) units, representing a rise of 11.8 percent. The proportion of diesel engines in the
production total remained at the previous year’s high level of 53.5 (53.9) percent.
Of the engines manufactured by AUDI HUNGARIA MOTOR Kft., 728,191 (682,337) were
supplied to companies within the Audi Group. 1,056,504 (954,282) engines were built on
behalf of other companies in the Volkswagen Group, and 91,287 (32,950) for third-party customers.
Automobili Lamborghini S.p.A. produced 2,095 (1,436) power units in the past financial
year, comprising 1,651 (972) ten-cylinder and 444 (464) twelve-cylinder engines.
Production start of the new Audi R8
The celebrations to mark “100 Years of Car Production at Neckarsulm” last autumn coincided with the start of production of the new Audi R8 super sports car at Neckarsulm. The
Neckarsulm plant boasts many years of experience in lightweight aluminium construction,
which is also used in the building of the Audi R8. This permits competitive small-scale production of a high technological calibre.
New hybrid-construction TT
The official production start of the new TT Coupé in March 2006 also heralded in a new departure in body manufacturing. Audi Space Frame technology was refined for the new TT,
with high-strength steel components now incorporated. The current hybrid-design TT body
comprises around 70 percent aluminium and 30 percent steel. This has appreciably reduced
the car’s overall weight and given it good weight distribution; the TT consequently already
has the ideal basis for outstanding handling characteristics in its body. The TT Coupé was
followed by the production launch of the new TT Roadster in November. The production line
is capable of turning out 270 bodies for this sports car every day.
146
Audi Toolmaking wins “Excellence in Production” competition
The AUDI AG Toolmaking Division scooped the award “Toolmaker of the Year” in the “Excellence in Production” competition in 2006; it had already earned this distinction once before,
in 2004. The division successfully fended off the challenge from 321 other toolmakers and
mould makers. The Audi Toolmaking Division has in recent years evolved from being an outand-out operating materials manufacturer into a system supplier. Around 1,500 people were
employed by the Audi Group within this division at the end of the year, at the locations Ingolstadt, Neckarsulm, Győr and Barcelona.
Sales and Distribution
The Audi Group boosted worldwide sales of Audi vehicles by 9.2 percent in the past financial
year, to 905,188 (829,109) units, thus setting a new all-time record. 257,792 (247,125) Audi
models were sold in the domestic market, 4.3 percent more than in the previous year.
Audi was also very successful in the USA in 2006. Between January and December,
90,116 (83,066) vehicles – an increase of 8.5 percent – were delivered to their new owners
there, despite the fact that the overall market shrank by 2.6 percent. Among other factors,
this welcome development is the first evidence that the optimised dealer network in the
®
USA is bearing fruit. Through its involvement in the diesel initiative “Bluetec ”, Audi has
joined forces with its partners Volkswagen and DaimlerChrysler in an effort to boost the
popularity of these high-performance but economical vehicles in the USA. The aim is to
further bolster the growth that it is targeting.
Vehicle sales – largest markets
Vehicle sales
2006
Year-on-year
percentage
change
2006 market
share, percent
Year-on-year
percentage
change in
overall market
Audi worldwide
905,188
9.2
Germany
257,792
4.3
7.6
3.8
USA
90,116
8.5
0.5
– 2.6
United Kingdom
86,003
5.7
3.6
– 3.9
China
81,708
38.8
2.0
26.1
Italy
59,002
6.2
2.5
4.0
Spain
54,557
10.3
3.4
– 2.0
France
45,525
9.7
2.2
– 3.3
Belgium
26,517
9.0
4.7
9.6
Netherlands
17,573
4.5
3.1
4.0
Austria
17,103
0.3
5.5
0.2
Japan
14,976
– 2.7
0.3
– 2.2
Sweden
14,583
17.0
4.8
3.1
Switzerland
13,947
8.7
5.4
1.7
South Africa
13,104
11.0
2.7
14.0
Russia
10,050
64.3
0.6
26.6
In China, the third-largest export market of the Audi Group, the brand with the four rings
succeeded in enlarging its market share by 38.8 percent to 81,708 (58,878) units, and as a
result was yet again the unchallenged market leader in the premium segment. Audi has an
exclusive dealer network of over 120 outlets in China. These sell both the A4 and A6, assembled locally from CKD kits, and imported Audi models.
147
69.8 (72.2) percent of all Audi vehicles sold by the Audi Group in the past financial year
were destined for Western Europe. It registered significant growth rates in the key markets
of this region, despite these markets as a whole contracting. Audi for example boosted its
unit sales in the United Kingdom – the brand’s most important export market in Western
Europe – by 5.7 percent to 86,003 (81,374) units. Audi is yet again the market leader in
Spain’s premium segment, with 54,557 (49,453) units sold.
Vehicle sales by model
2006
2005
Audi A2
260
13,321
Audi A3
73,658
75,673
161,906
139,496
16,753
10,633
Audi A3 Sportback
Audi TT Coupé
Audi TT Roadster
2,745
5,635
Audi A4 saloon
162,239
170,390
Audi A4 Avant
142,302
154,422
Audi A4 Cabriolet
27,410
23,560
Audi RS 4 saloon
4,375
509
Audi RS 4 Avant
2,661
11
Audi RS 4 Cabriolet
585
–
Audi A6 saloon
148,227
141,059
Audi A6 Avant
76,556
64,878
9,799
7,431
Audi A6 allroad quattro
Audi Q7
52,771
674
Audi A8
22,601
21,417
905,188
829,109
1,610
1,071
477
529
Total, Audi brand*
Lamborghini Gallardo
Lamborghini Murciélago
Total, Lamborghini brand
Other Volkswagen Group brands
Total, Group
2,087
1,600
228,279
214,405
1,135,554
1,045,114
* including internal vehicles for launch purposes
Partnership with renowned market research institute
In partnership with the University of St. Gallen, AUDI AG and a market research lab
have established a leading international research centre that focuses on integrating customer requirements even more deeply into the development and marketing processes for
cars. The aim of this Audi market research activity is to identify customers’ individual and
market-specific preferences using innovative methods of market research, and to incorporate the findings into the Audi development process at an early stage.
The market research lab will be spearheaded by a well-established researcher and has
access to an international network of high-calibre experts.
148
Financial performance
The Audi Group increased its revenue by 17.1 percent in the 2006 financial year to
EUR 31,142 (26,591) million, the highest ever in the lengthy history of the company.
Of the revenue total, the amount of EUR 23,404 (19,370) million was generated by sales of
Audi vehicles. As in previous years, the A4 car line was the revenue mainstay. There was,
however, another marked increase in the revenue produced by sales of the A3, A6 and A8
car lines. Even though the new Audi TT Coupé was only gradually launched from September
2006, its outstanding sales performance is already reflected in the revenue figures. The high
demand for the Audi Q7 in the past financial year is noted with particular satisfaction; in its
very first year, this model emerged as a major source of revenue.
The Audi Group also sells vehicles of the Bentley, SEAT, Škoda, VW Passenger Car, VW
Commercial Vehicle brands via the sales subsidiaries AUTOGERMA S.p.A., Audi Volkswagen
Korea Ltd. and Audi Volkswagen Middle East FZE. Revenue from sales of these brands of
vehicles enjoyed an increase of 5.0 percent in the 2006 financial year.
The cost of sales for the Audi Group rose by 16.5 percent and therefore by a slower rate
than revenue. The purchase price reductions and productivity advances secured partially
compensated for the increase in direct materials prompted by the higher sales volume.
The Audi Group was thus able to boost its gross profit by 21.6 percent to EUR 3,833
(3,152) million.
Although the 2006 financial year witnessed a large number of new models launched, distribution costs rose only underproportionally in relation to revenue, to EUR 2,164 (1,877)
million. Administrative expenses were on a par with the previous year at EUR 237 (240) million.
The EUR 211 million rise in the other operating result stemmed principally from the reversal of provisions.
The Audi Group’s operating result of EUR 2,015 (1,407) million at the close of the financial
year was EUR 608 million, i.e. 43.2 percent, up on the previous year, supplying yet further
impressive evidence of how successful the ongoing cost-cutting and process improvement
measures have been. The EUR 28 million rise in the financial result is attributable in the first
instance to higher interest income and the improved result for investments accounted for
using the equity method.
149
Development of profit before tax and rate of return before tax
2003
2004
2005
2006
1,101
1,143
1,310
1,946
4.7
4.7
4.9
6.2
2,000
1,500
1,000
500
0
Profit before tax (EUR million)
Rate of return before tax (in %)
The Audi Group consequently posted an impressive 48.5 percent rise in profit before tax to
EUR 1,946 (1,310) million. Profit after tax reached EUR 1,343 (824) million and therefore likewise showed a rise of 63.0 percent.
Key earnings data
%
Rate of return before tax
2006
2005
6.2
4.9
Equity return after tax
20.1
13.8
Return on investment
14.2
9.7
The positive business trend is also reflected in an improvement in the key return ratios. The
rate of return before tax, for instance, rose from 4.9 percent to 6.2 percent. The return on
investment, as an indication of the profitability of a company, showed an impressive rise
from 9.7 to 14.2 percent, for the first time exceeding the threshold of the long-term target of
the Audi Group of ten percent.
150
Net worth
Balance sheet structure
EUR million
2003
2004
2005
2006
2006
7,536
7,265
2005
2004
2003
6,104
8,143
5,828
5,487
749
8,430
8,263
2,109
Equity
4,610
Fixed assets
4,202
454
Other noncurrent assets
325
Inventories
1,814
Other
current assets
2,453
Cash and cash
equivalents
540
2,042
3,632
4,291
3,701
4,785
4,875
1,832
2,368
7,035
2,343
5,806
4,884
Current
liabilities
3,105
1,208
14,063
Non-current
liabilities
1,759
14,904
16.112
18,910
18,910
16,112
14,904
14,063
The balance sheet total of the Audi Group at December 31, 2006 was EUR 18,910 (16,112)
million, an increase of 17.4 percent on the prior-year total.
Non-current assets were down 3.6 percent to EUR 8,285 (8,597) million mainly as a result
of higher depreciation and lower development expenditure recognised as an intangible
asset.
Current assets, on the other hand, were up 41.4 percent to EUR 10,625 (7,515) million.
This change is attributable above all to the increase in cash and cash equivalents (plus
EUR 1,779 million), the rise in trade receivables (plus EUR 342 million) and the higher level
of securities held as current assets (plus EUR 555 million).
Capital investments were 12.7 percent up on the previous year at EUR 1,925 (1,708) million, mainly due to increased production capacity. EUR 1,256 (1,138) million of this total was
spent on property, plant and equipment, representing a rise of 10.4 percent.
The 19.0 percent rise in equity to EUR 7.265 (6,104) million is primarily due to the capital
injection of EUR 231 million by Volkswagen AG and the allocation to the other retained earnings of the balance of EUR 487 (362) million remaining after the transfer of profit. Actuarial
gains from the remeasurement of defined benefit liabilities moreover affected this figure.
The equity ratio of the Audi Group consequently rose to 38.4 (37.9) percent.
Non-current liabilities were up on the previous year at EUR 4,610 (4,202) million. In particular, other liabilities and provisions also rose.
151
Current liabilities rose to EUR 7,035 (5,806) million. Within this, current provisions
showed an increase on the prior-year level due to the sales volume, and other liabilities rose
following the higher profit transfer to Volkswagen AG.
Capital investments and cash flow in the Audi Group
2003
2004
2005
2006
Capital
investments (EUR million)
2,047
2,056
1,708
1,925
Cash flow from operating
activities (EUR million)
2,786
2,690
3,252
4,428
5,000
4,000
3,000
2,000
1,000
0
Financial position
The Audi Group boosted its cash flow from operating activities by 36.2 percent in the 2006
financial year to EUR 4,428 (3,252) million. This rise results principally from the higher earnings in conjunction with higher depreciation. The cash outflow for investing activities was
well up on the previous year at EUR 2,442 (1,712) million. The upward change is largely due
to the purchase of securities. After adjustment for this effect, the cash outflow is EUR 1,890
million. As already the case in previous years, the cash flow from operating activities covered the cash outflow for investing activities in full. The priority capital investments in 2006
were the start of TT production and the capacity extensions for Audi Q7 production.
Net liquidity at December 31, 2006 was EUR 5,720 (3.391) million, an increase of 68.7 percent on the previous year.
152
Cash flow statement
EUR million
2006
2005
Cash flow from operating activities
4,428
3,252
Cash flow from investing activities
– 2,442
– 1,712
Net cash flow
1,986
1,540
Cash flow from financing activities
– 202
– 203
Net liquidity
5,720
3,391
Cash pooling within the Audi Group is centralised at AUDI AG. Surpluses and shortages of
cover are equalised via the cash pool at Volkswagen AG. All transactions are handled on
market terms.
At the end of the financial year, the Audi Group had other financial obligations amounting to EUR 1,520 (1,202) million, mainly in the form of ordering commitments. An overview is
provided in the Notes on page 199, Section 4, Other financial obligations.
Report on post-balance sheet date events
No events of particular significance which must be reported according to IAS 10 occurred
after December 31, 2006.
Risk report
The risk management
system within the Audi
Group
In accordance with the risk management strategy of the Audi Group, the wide-ranging risks
that are inseparably associated with the business activities of the company are minimised or
if possible avoided in order to prevent potential losses to the company. Risks are consciously taken only where they are readily calculable and where this course of action appears justifiable within the context of seizing favourable business opportunities.
The Audi Group maintains a group-wide risk management and risk early warning system.
This covers the parent company and all subsidiaries from which potential existencethreatening developments could spread to the parent company.
The tasks of risk management in the Audi Group are reflected non-centrally by organisational processes at the level of the individual corporate divisions and subsidiaries. Risk
management is thus an integral aspect of the existing business processes of the Audi
Group. Clearly defined task areas as well as reporting and recording obligations are laid
down for the corporate divisions and subsidiaries.
In the context of the defined spheres of responsibility within the risk management system, potential risks are identified, appropriate measures are elaborated and implemented
for their management and monitoring, and the success of the measures taken is constantly
monitored. The effectiveness of the management and monitoring system is constantly examined.
153
Within the process of identifying and evaluating risks, the probability of individual risks
materialising is estimated and the potential extent of the loss in each individual case quantified. The lost profit contribution serves as the measure for this purpose.
Reports on key risks are submitted to the Board of Management and the Supervisory
Board on a regular basis.
In the context of its business activities, the Audi Group encounters the following key risk
areas:
Risks from the economic
context and the car
industry
As a market player with activities worldwide, the Audi Group is highly dependent on the
general underlying state of the economy. This affects in particular the major sales markets
of the group, which are Western Europe, the USA, China and Japan. Although the general
economic situation can currently be rated as positive throughout the aforementioned sales
regions, a weakening or even reversal of the positive trends can have a direct impact on
consumer behaviour in the car sector. The positive state of the economy in general in the
USA, for instance, is not currently reflected by the current fortunes of the car market there.
Protracted high prices or further price rises for energy and raw materials on the one hand
harbour financial risks for production and, on the other hand, can lead to consumer reticence, thus hampering vehicle sales.
The premium segment, in which the models of the Audi and Lamborghini brands are positioned, is fundamentally less exposed to the negative impact of cyclical fluctuations. The
possibility of sales risks from a deterioration in the general economy and the consequent
downturn in the market can, however, not be excluded even in that segment. The other
Volkswagen Group brands, whose products are sold via Audi sales subsidiaries in Italy, Korea and the Arab world, are more exposed to cyclical sales risks than the Audi brand.
Because of the international emphasis of its business activities, the Audi Group earns a
significant proportion of its revenue in foreign currency. This revenue is exposed to risks
from exchange rate movements. In particular, unanticipated changes in the exchange rate
between the US dollar and the euro can severely diminish revenues and the consolidated
net profit.
Accessing the private consumer market in China could potentially entail further market
risks for Audi.
The continuing predatory competition in the car trade as a result of the increasing use of
sales incentives, not least in the important Audi markets of USA and China, but also in Germany, may lead to price erosion and higher marketing costs, with a correspondingly negative impact on revenue and earnings. In Europe, the Italian car market in particular has been
dominated by an exceptionally high level of sales incentives for some time now. This unfavourable development, which could lead to a considerable rise in marketing costs, may
diminish the earnings of the Italian subsidiary AUTOGERMA S.p.A.
Price developments among competitors, which Audi may be obliged to follow, could
likewise have a lasting adverse effect on the group’s revenue and earnings performance in
the event of a negative trend.
As an innovative car manufacturer, the company is constantly exploring new niches in
the product range. Not every detail of the market’s response to new models can be anticipated, in spite of meticulous market studies that have accompanied the product decisionmaking process. The level of acceptance by the market of new generations of established
car lines may moreover not live up to expectations.
Changes to the legal context, such as tougher statutory requirements for vehicle safety,
fuel consumption and exhaust emissions, continue to be a risk factor for the car industry.
154
Risks from operating
activities
There are diverse risks within the context of the Audi Group’s operating activities which can
substantially undermine its financial position and financial performance.
These include major fires and explosions that, on the one hand, damage or destroy the
group’s assets and, on the other hand, may cause considerable consequential losses by
hindering the production process. Production hitches may take the form of disruptions to
the energy supply and technical disruptions, in particular to electronic data processing.
Although such occurrences could potentially lead to high losses, their likelihood is relatively
low. The group counteracts such risks through preventive measures such as fire protection
and by taking out adequate insurance cover.
The close, economically advantageous collaboration between car manufacturers and
suppliers that is customary in this industry is increasingly leading to interdependence. This
trend is gaining momentum as a result of the exclusive use of innovative technologies by
globally active suppliers. The risks arising from this are counteracted within the company
through appropriate contractual arrangements, and in particular through the retention of
ownership of tools by the Audi Group.
Delivery delays or non-delivery as a result of tool breakage, emergency losses and strikes
at suppliers or in the transport sector hamper the production process. A rise in the number
of crises at suppliers, in some cases leading to their insolvency, has been observed. The
risks of loss of income from the above factors are limited within the Audi Group by taking
out appropriate insurance cover and the use of suitable methods of selecting and monitoring suppliers.
The complex product development process for new vehicles and components goes hand
in hand with risks from delays, from changes to the product at short notice and from the
loss of expertise as a result of the involvement of third-party service providers in the development process.
Despite the presence of an efficient, systematic quality management approach within the
Audi Group, potential product liability risks cannot be entirely excluded. These can both
result in considerable financial losses to the company and also harm its image.
Financial risks
The financial risks to which the Audi Group is exposed as a result of its business activities
comprise market price risks (exchange-rate, interest-rate and price risks from commodities),
creditworthiness risks and liquidity risks.
As a result of its worldwide sales markets, the Audi Group is exposed to particular risks
from exchange-rate movements, above all of the US dollar and the pound sterling.
Detailed information on the hedging policy and on risk management in the area of financial risks, in particular in relation to the use of derivative financial instruments in hedging
transactions, is provided in the notes to the consolidated financial statements of the Audi
Group from page 197, in the chapter “Other particulars” under the item “Hedging policy and
risk management”.
Overall assessment of the
risk situation
Compared with the previous year, there is no substantial change in the risk situation of the
Audi Group.
The risks described harbour the potential to undermine the financial position and financial performance of the Audi Group to a significant degree. However, on the basis of all
known particulars and circumstances, there are currently no risks that can endanger the
company’s survival in the foreseeable future.
155
Report on expected developments
Anticipated development in
the underlying economic
situation
General economic situation
The Audi Group expects the global upswing to continue in 2007 with marginally less vigour.
The incipient slowdown in the US economy in particular will restrict growth worldwide.
South America and Asia will therefore prove to be important centres of growth.
In the USA, economic growth is expected to slow to less than 3.0 percent. On the back of
high energy prices and higher interest rates, private consumption will lose momentum
somewhat. Growth in investment, too, will be weaker than in the previous year due to the
deterioration in the sales and earnings prospects.
There are early indications of an easing of economic growth in the eurozone as a result
of falling global demand and tighter fiscal policy. The Audi Group expects economic growth
of slightly more than 2.0 percent in the eurozone.
In Germany, the economy will cool down again in 2007 following the high growth in
gross domestic product in the previous year. Export activity is likely to be held back by the
continuing strength of the euro and the moderate development of the global economy.
Domestic demand will not provide any lasting stimuli. On the one hand, this is due to private
consumption being dampened by the rise in the VAT rate and other fiscal measures. On the
other hand, investment activity will weaken. The cumulative effect of these factors will be to
reduce economic growth, probably to less than 2.0 percent.
The pace of economic expansion in many emerging countries in South America and Asia
remains high.
Economic growth in China should virtually match the high level of the previous year. As a
result of slightly weaker demand worldwide, the Japanese economy will continue to expand
at the modest rate of around 2.0 percent.
The car industry
Global demand for cars is expected to lose some of its vigour in 2007. For the year as a
whole, the Audi Group expects worldwide unit sales to grow by around 1 percent to 55 million vehicles.
Vehicle sales should recover somewhat on the highly competitive US car market, and rise
to 16.8 million units.
By contrast, in Western Europe (excluding Germany) the Audi Group expects the car market to be slightly recessive. With vehicle sales forecast to reach 11.1 million, the Western
European car market would be 0.8 percent down on the previous year.
A further overall rise in car sales is expected in Central and Eastern European countries.
In Russia, the most significant market in the region, Audi’s forecast envisages sales growth
to around 1.8 million cars.
The market will remain dynamic in the Asia-Pacific region. However, the pace of growth
in India and China is likely to slow down considerably compared with the previous year. In
China, the Audi Group expects slight growth in the overall market. Japan is expected to
enjoy a positive trend in registrations of new cars.
The registration statistics for the German car market in 2007 will be adversely affected by
the increase in the VAT rate on January 1, 2007. This prompted many customers planning to
buy a new car to bring forward their purchase into 2006. For the market as a whole, the Audi
Group therefore expects to see a slight drop in the volume of cars registered to just under
3.4 million vehicles.
156
Anticipated development of
the Audi Group
The underlying economic situation and the market context remain challenging for the Audi
Group. It will consequently take quite some effort to extend the consistently positive run of
results over recent years. These past successes set the yardstick for the company very high.
The management is nevertheless convinced that Audi will yet again be able to present a
positive overall record of its business activities for the 2007 financial year.
Anticipated development in vehicle sales
Upholding sales growth remains an important objective of the Audi Group in 2007. It aims to
maintain the sustained positive trend of recent years during the current financial year. The
objective for worldwide vehicle sales is therefore to establish another new record. Alongside
the existing product range, a large number of new models and derivative versions will help
by increasing the choice for customers in the premium segment, as well as enhancing the
brand’s appeal.
The company’s established markets, Germany and Western Europe, will remain the pillars of its success. Thanks to the impressive string of new models that it has unveiled, the
Audi Group has already performed the groundwork for successfully tackling the market
conditions, which could in some cases be problematic.
In the Eastern European region, the successful growth of recent years is expected to be
maintained.
Audi believes it is moreover equipped to withstand the intensive competition in the USA
in 2007. On the one hand the Audi Q7 will now be available for the full twelve months, following its launch last year. On the other hand additional attractive models will be appearing
on the North American market. In parallel, the company will be working intensively on enhancing its brand image and on optimising the dealer network in that region. The growth
rate is likewise to be maintained unabated in the Asia-Pacific region. The Audi Group has
particularly high expectations of China, where it hopes to build on its market lead. Unit sales
there are expected to rise yet again in 2007. The company moreover anticipates a positive
overall development in unit sales in the other countries of that region.
Anticipated financial performance
In line with the higher unit sales anticipated, the revenue of the Audi Group is likely to exceed the 2006 level in the 2007 financial year. The regional distribution of the sales trend
forecast will approximately mirror growth in unit sales.
Despite higher capital investments on extensions to the model and engine range and on
the further expansion of the worldwide dealer and service network, the key earnings data for
2007 will remain at the outstanding level of the previous year.
Thanks to the positive impact of our continuous process improvement and productivity
enhancement programmes, the company can even expect to better the previous year’s earnings.
Anticipated financial position
The priority aim for 2007 remains to finance growth from the positive cash flow generated.
Once again, no external sources of financing will be used. The intra-group cash pool is able
to guarantee the liquidity required by all group companies.
The cash flow from operating activities will probably match the high level of 2006.
Against the backdrop of the model initiative’s longer-term perspective, higher cash outflows
for investing activities are expected for the 2007 financial year. The cash outflow for financing activities will probably be up on the level of the 2006 financial year due to the higher
profit transfer to Volkswagen AG.
The net liquidity of the Audi Group will continue to develop positively as planned up until
the end of 2007, despite higher capital investments.
157
Capital investments
Capital investments scheduled for the medium term are intended predominantly for customer-oriented additions to the model and engine range, the essential expansion of development and production structures, improving the productivity and quality of process chains,
and strengthening customer loyalty. All investment measures share the same objective of
lastingly strengthening the market position of the Audi Group through a forward-looking
model and brand strategy.
The investment volume for property, plant and equipment and for financial assets envisaged for the period from 2007 to 2011, together with development expenditure recognised
as an intangible asset, amounts to just under EUR 13 billion for the Audi Group. The 2007
financial year accounts for around one fifth of this sum. The cash flow from operating activities will cover investment spending in full for the entire planning period.
Capital investments principally concern direct production activities and will for the most
part be earmarked for the production areas at Ingolstadt, Neckarsulm and Győr. Capital
investments at suppliers represent a further focal area.
Anticipated development in the workforce
The workforce will remain largely unchanged in 2007 compared with the past financial year.
Opportunities for future development
The main determining factors behind the future development of the Audi Group again consist above all in forward-looking strategies and measures designed to assure the steady
qualitative and quantitative growth of the company in the long term.
Systematically pushing forward with the model initiative that is already under way remains of key importance. The large number of new models launched in the past financial
year will be joined by the Audi TT Roadster, the Audi A5 and the new Audi R8 super sports
car in the first half of 2007. Further new models will fit seamlessly into the ongoing process
of extending and rejuvenating the range in the second half of the year and also in subsequent years.
The objective of serving existing markets even more successfully remains valid for 2007.
Following the successful establishment of the group’s own subsidiaries in the important
sales regions of the Middle East and South Korea in 2005, the spotlight will shift to the restructuring of the sales organisation in North America. The domestic sales organisation also
merits particular attention.
The Audi Group expects the aforementioned measures to provide lasting prospects of
growth that will determine the development of the company’s volume figures as well as its
financial performance data over the coming years.
Over and above the strategy-related determining factors listed above, external factors may
provide additional opportunities. Falls in the price of raw materials and advantageous exchange rate movements could, for instance, have a positive impact on financial performance.
158
Overall assessment of anticipated future developments
The Audi Group is striving for sustained, qualitative and quantitative growth in 2007 and
indeed in subsequent financial years. This objective will moreover be evident from the business figures for 2007.
Disclaimer
The management Report contains statements relating to anticipated future developments.
These statements are based on current assessments and are by their very nature exposed to
risks and uncertainty. Actual outcomes may differ from those predicted in these statements.
159
Independent Auditor’s Report
This report was originally prepared in German. In case of ambiguities the German version
shall prevail:
“Auditor’s Report
We have audited the consolidated financial statements prepared by AUDI AG, Ingolstadt,
comprising the balance sheet, income statement, statement of recognised income and expense, cash flow statement and the notes to the consolidated financial statements, together
with the group management report for the business year from January 1 to December 31,
2006. The preparation of the consolidated financial statements and the group management
report in accordance with the IFRS, as adopted by the EU, and the additional requirements
of German commercial law pursuant to § (Article) 315a Abs. (Paragraph) 1 HGB (“Handelsgesetzbuch”: German Commercial Code) are the responsibility of the parent Company’s Board
of Management. Our responsibility is to express an opinion on the consolidated financial
statements and on the group management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with
§ 317 HGB and German generally accepted standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany)
(IDW). Those standards require that we plan and perform the audit such that misstatements
materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial
reporting framework and in the group management report are detected with reasonable
assurance. Knowledge of the business activities and the economic and legal environment of
the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control
system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the
framework of the audit. The audit includes assessing the annual financial statements of
those entities included in consolidation, the determination of the entities to be included in
consolidation, the accounting and consolidation principles used and significant estimates
made by the Company´s Board of Management, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe
that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion based on the findings of our audit, the consolidated financial statements
comply with the IFRS, as adopted by the EU, and the additional requirements of German
commercial law pursuant to § 315a Para. 1 HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these
requirements. The group management report is consistent with the consolidated financial
statements and and as a whole provides a suitable view of the Group’s position and suitably
presents the opportunities and risks of future development.”
Munic, February 13, 2007
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
160
Wagner
ppa. Justenhoven
Wirtschaftsprüfer
Wirtschaftsprüferin
Declaration of the AUDI AG Board of Management
on the 2006 consolidated financial statements
The Board of Management of AUDI AG is responsible for the preparation of the consolidated
financial statements and group management report. Reporting is performed on the basis of
the International Financial Reporting Standards (IFRS) as applicable within the European
Union, and the interpretations of the International Financial Reporting Interpretations
Committee (IFRIC). The group management report is prepared in accordance with the requirements of the German Commercial Code. Under Section 315a of the German Commercial Code, AUDI AG is obliged to prepare its consolidated financial statements in accordance
with the requirements of the International Accounting Standards Board (IASB).
The regularity of the consolidated financial statements and group management report is
assured by means of internal controlling systems, the implementation of uniform guidelines
throughout the group, and employee training and advancement measures. Compliance with
the legal requirements and with internal group guidelines, as well as the reliability and functioning of the systems of controlling, are checked on an ongoing basis throughout the
group. The early warning function required by law is achieved by means of a group-wide risk
management system that enables the Board of Management to identify potential risks at an
early stage and initiate corrective action as necessary.
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Munich,
has examined the consolidated financial statements and group management report in its
capacity as independent auditor, in accordance with the resolution of the Annual General
Meeting, and issued its unqualified certification as shown on the page opposite.
The consolidated financial statements, the group management report, the audit report
and the measures to be taken by the Board of Management for the prompt identification of
risks which could pose a threat to the company’s survival were discussed at length by the
Supervisory Board in the presence of the auditors. The findings of this examination are indicated in the Report of the Supervisory Board.
161
Consolidated Financial Statements of the Audi Group at December 31, 2006
Income statement of the Audi Group
for the 2006 financial year
EUR million
Notes
2006
Revenue
1
31,142
26,591
Cost of sales
2
27,309
23,439*
Gross profit
2005
3,833
3,152*
2,164
1,877*
4
237
240*
5
1,051
Distribution costs
3
Administrative expenses
Other operating income
Other operating expenses
6
Profit from operating activities
Result from investments accounted for using the
equity method
7
Finance cost
8
790
468
418*
2,015
1,407*
17
– 12
Interest expense
128
126
Interest on provisions
126
114*
Other financial results
9
Financial result
Profit before tax
168
155
– 69
– 97*
1,946
1,310
603
486
Profit after tax
1,343
824
Interests of AUDI AG shareholders
1,343
824
856
462
487
362
2006
2005
Income tax expense
10
Appropriation of profits
Profit transfer to Volkswagen AG
11
Transfer to retained earnings
EUR
Earnings per share
12
31.24
19.17
Diluted earnings per share
12
31.24
19.17
* Figures adjusted for ease of comparison due to the reclassification of anticipated returns on plan assets pursuant to IAS 19.
162
Balance sheet of the Audi Group
at December 31, 2006
ASSETS EUR million
Notes
NON-CURRENT ASSETS
Dec. 31, 2006
Dec. 31, 2005
8,285
8,597
Fixed assets
Intangible assets
13
2,335
2,685
Property, plant and equipment
14
5,023
5,221
Investment property
15
9
10
Investments accounted for using the equity
method
128
121
16
41
106
Deferred tax assets
17
636
403
Other receivables and other financial assets
18
113
51
Other long-term investments
CURRENT ASSETS
10,625
7,515
Inventories
19
2,109
2,042
Trade receivables
20
1,840
1,498
Effective income tax assets
21
7
2
Other receivables and other financial assets
18
771
384
Assets held for sale
22
–
25
Securities
23
1,014
459
Cash and cash equivalents
24
EQUITY AND LIABILITIES EUR million
Notes
EQUITY
4,884
3,105
18,910
16,112
Dec. 31, 2006
Dec. 31, 2005
7,265
6,104
Issued capital
25
110
110
Capital reserve
25
483
252
Retained earnings
25
6,672
5,742
11,645
10,008
LIABILITIES
Non-current liabilities
4,610
4,202
Financial liabilities
26
3
15
Deferred tax liabilities
27
7
52
Other liabilities
28
201
81
Defined benefit liabilities
29
1,974
2,180
Effective income tax obligations
30
520
426
Other provisions
31
1,905
1,448
7,035
5,806
Current liabilities
Financial liabilities
26
210
165
Trade payables
32
2,255
2,150
Effective income tax obligations
30
536
348
Other liabilities
28
2,109
1,615
Other provisions
31
1,925
1,508
Liabilities held for sale
22
–
20
18,910
16,112
163
Cash flow statement of the Audi Group
from January 1 to December 31, 2006
EUR million
2006
2005
Profit before profit transfer and taxation
1,946
1,310
Income tax payments
– 889
– 691
904
583
1,538
1,282
73
46
3
25
Amortisation of development expenditure recognised as an
intangible asset
Depreciation of and write-ups on property, plant and equipment and
amortisation of intangible assets
Impairment losses on long-term investments
Result from asset disposals
Result from accounting using the equity method
– 12
29
Change in provisions (excluding tax provisions)
961
424
Change in inventories
– 85
– 204
Change in receivables
– 425
– 35
425
457
Change in liabilities
Other non-cash expenses / income
– 11
26
Cash flow from operating activities
4,428
3,252
Additions for development expenditure recognised as an intangible asset
Investments in property, plant and equipment and in intangible assets
Acquisition of affiliated companies and participating interests
Change in securities
Sale of shares
Investments in investment property
Cash inflows arising from asset disposals
Cash flow from investing activities
Capital contributions
Transfer and distribution of profit
(of which to Volkswagen AG: EUR 462 million
(previous year EUR 405 million))
– 625
– 544
– 1,292
– 1,161
–8
– 11
– 552
– 42
13
0
0
–1
22
47
– 2,442
– 1,712
231
195
– 462
– 407
Change in financial liabilities and in credit extended
30
11
Lease payments
–1
–2
Cash flow from financing activities
– 202
– 203
Effect of changes to the group
–2
5
Effect of foreign exchange-rate changes
–3
4
Change in cash and cash equivalents
1,779
1,346
Cash and cash equivalents at start of period
3,105
1,759
Cash and cash equivalents at end of period
4,884
3,105
EUR million
2006
2005
Cash and cash equivalents
4,884
3,105
Securities and credit extended
1,050
474
Gross liquidity
5,934
3,579
Credit outstanding
– 214
– 188
Net liquidity
5,720
3,391
164
Statement of changes in equity of the Audi Group
for the 2006 financial year
EUR million
2006
2005
Securities available for sale
Fair value changes recognised directly in equity
4
26
Income and expense recognised from the sale of securities
0
– 31
Fair value changes recognised directly in equity
471
– 199
Income and expense recognised from the settlement of cash flow hedges
– 19
14
Cash flow hedges
Currency translation differences
– 15
36
– 282
194
Actuarial gains and losses from defined benefit liabilities
284
– 321
Income and expense recognised directly in equity
443
– 281
Profit after tax
1,343
824
Total expense and income recognised in the financial year
1,786
543
Tax items credited directly to equity
165
Notes to the consolidated financial statements
of the Audi Group for the 2006 financial year
Development of fixed assets in the 2006 financial year
EUR million
Gross carrying amounts
Costs
Changes
in consolidated
companies
Currency
changes
Additions
Additions
from
accounting
using the
equity
method
Transfers
Disposals
Disposals
from
accounting
using the
equity
method
Jan.1, 2006
Intangible assets
Concessions, industrial property rights
and similar rights and values, as well as
licences thereto
287
–
–
35
–
10
11
–
Goodwill
172
–
–
–
–
–
–
–
Development expenditure recognised as an
intangible asset, products currently in
development
740
–
–
532
–
– 389
–
–
Development expenditure recognised as an
intangible asset, products currently in use
2,938
–
–
93
–
389
464
–
2
–
–
1
–
–1
–
–
4,139
–
–
661
–
9
475
–
Land, land rights and buildings, including
buildings on land owned by others and
leased buildings
3,248
–
–2
78
–
29
22
–
Plant and machinery
3,910
–
–
152
–
85
294
–
Furniture, fixtures and office equipment,
as well as leased furniture, fixtures and
office equipment
7,956
–
–
530
–
144
192
–
Payments on account for intangible assets
Property, plant and equipment
Payments on account and assets in
course of construction
Investment property
Investments accounted for
using the equity method
353
–
–
496
–
– 267
4
–
15,467
–
–2
1,256
–
–9
512
–
14
–
–1
–
–
–
–
–
121
–
–9
–
19
–
–
3
143
–
–
8
–
–
–
–
11
–
–
–
–
–
–
–
154
–
–
8
–
–
–
–
Other long-term investments
Investments in affiliated companies
Participating interests
Total fixed assets
166
19,895
–
– 12
1,925
19
–
987
3
Reduction in gross carrying amounts
Carrying amounts
Costs
Accumulated depreciation
and amortisation
Dec. 31, 2006
Jan. 1, 2006
321
138
–
–
62
50
3
11
–
172
–
–
–
–
–
–
–
–
883
1
–
–
–
31
–1
–
2,956
1,315
–
–
567
306
1
2
–
–
–
–
–
–
4,334
1,454
–
–
629
387
3
3,331
1,546
–
–
115
–
3,853
2,758
–
–
333
–
8,438
5,942
–
–
818
160
Changes
in consolidated
companies
Currency
changes
Additions,
scheduled
Additions,
unscheduled
Transfers
Disposals
Writeups
Accumulated depreciation
and amortisation
Dec. 31, 2006
Dec. 31, 2006
Dec. 31, 2005
242
79
149
–
172
172
–
31
852
739
463
–
1,726
1,230
1,623
–
–
–
2
2
474
–
1,999
2,335
2,685
–
22
–
1,639
1,692
1,702
–
292
–
2,799
1,054
1,152
–3
178
–
6,739
1,699
2,014
578
–
–
–
–
–
–
–
–
–
578
353
16,200
10,246
–
–
1,266
160
–3
492
–
11,177
5,023
5,221
13
4
–
–
–
–
–
–
–
4
9
10
128
–
–
–
–
–
–
–
–
–
128
121
151
46
–
–
–
73
–
–
–
119
32
97
11
2
–
–
–
–
–
–
–
2
9
9
162
48
–
–
–
73
–
–
–
121
41
106
20,837
11,752
–
–
1,895
620
–
966
–
13,301
7,536
8,143
167
Development of fixed assets in the 2005 financial year
EUR million
Gross carrying amounts
Costs
Changes
in consolidated
companies
Currency
changes
Additions
Additions
from
accounting
using the
equity
method
Transfers
Disposals
Disposals
from
accounting
using the
equity
method
Jan. 1, 2005
Intangible assets
Concessions, industrial property rights
and similar rights and values, as well as
licences thereto
280
0
–
24
–
10
27
–
Goodwill
172
–
–
–
–
–
–
–
Development expenditure recognised as an
intangible asset, products currently in
development
572
–
–
488
–
– 317
3
–
Development expenditure recognised as an
intangible asset, products currently in use
2,773
–
–
56
–
317
208
–
5
–
–
1
–
–4
–
–
3,802
0
–
569
–
6
238
–
Land, land rights and buildings, including
buildings on land owned by others and
leased buildings
3,170
–
1
62
–
50
35
–
Plant and machinery
3,924
–
1
134
–
150
299
–
Furniture, fixtures and office equipment,
as well as leased furniture, fixtures and
office equipment
7,501
0
1
641
–
95
282
–
Payments on account for intangible assets
Property, plant and equipment
Payments on account and assets in
course of construction
Investment property
Investments accounted for
using the equity method
353
–
–
301
–
– 299
2
–
14,948
0
3
1,138
–
–4
618
–
15
–
–
1
–
–2
–
–
135
–
17
–
–
–
3
28
151
–
–
–
–
–
8
–
–
–
Other long-term investments
Investments in affiliated companies
Investments in associates
Participating interests
Total fixed assets
168
–
–
–
–
–
–
11
–
–
–
–
–
162
–
–
–
–
–
8
–
19,062
0
20
1,708
–
–
867
28
–
Reduction in gross carrying amounts
Carrying amounts
Costs
Accumulated depreciation
and amortisation
Dec. 31, 2005
Jan. 1, 2005
287
101
0
–
61
–
1
25
172
–
–
–
–
–
–
–
740
–
–
–
1
–
–
2,938
941
–
–
582
–
2
–
–
–
–
–
4,139
1,042
0
–
644
–
3,248
1,436
–
–
123
–
1
3,910
2,707
–
1
346
–
–
7,956
5,439
0
1
770
–
–1
267
Changes
in consolidated
companies
Currency
changes
Additions,
scheduled
Additions,
unscheduled
Transfers
Disposals
Writeups
Accumulated depreciation
and amortisation
Dec. 31, 2005
Dec. 31, 2005
Dec. 31, 2004
–
138
149
179
–
–
172
172
–
–
1
739
572
–
208
–
1,315
1,623
1,832
–
–
–
–
2
5
1
233
–
1,454
2,685
2,760
14
–
1,546
1,702
1,734
279
17
2,758
1,152
1,217
–
5,942
2,014
2,062
353
–
–
–
–
–
–
–
–
–
353
353
15,467
9,582
0
2
1,239
–
–
560
17
10,246
5,221
5,366
14
5
–
–
–
–
–1
–
–
4
10
10
121
–
–
–
–
1
–
1
–
–
121
135
143
–
–
–
–
46
–
–
–
46
97
151
–
–
–
–
–
–
–
–
–
–
–
–
11
2
–
–
–
–
–
–
–
2
9
9
154
2
–
–
–
46
–
–
–
48
106
160
19,895
10,631
0
2
1,883
47
–
794
17
11,752
8,143
8,431
169
General information
AUDI AG has the legal form of a German share-issuing company (Aktiengesellschaft). Its
registered office is in Ettinger Strasse, Ingolstadt, and it is entered in the Commercial Register in Ingolstadt under HR B 1.
Around 99 percent of the share capital of AUDI AG is held by Volkswagen AG, Wolfsburg,
with which a control and profit transfer agreement exists. The consolidated financial statements of AUDI AG are included in the consolidated financial statements of Volkswagen AG,
which are deposited with the Local Court of Wolfsburg.
The object of the company is the development, production and sale of motor vehicles,
other vehicles and engines of all kinds, together with their accessories, as well as machinery, tools and other technical articles.
Primary accounting basis
AUDI AG prepares its consolidated financial statements on the basis of the International
Financial Reporting Standards (IFRS) and the interpretations of the International Financial
Reporting Interpretations Committee (IFRIC). All pronouncements of the International Accounting Standards Board (IASB) where application is mandatory have been observed. The
prior-year figures have been calculated according to the same principles.
The income statement is prepared according to the internationally practised function of
expense method.
The consolidated financial statements provide a true and fair view of the financial performance and financial position of the Audi Group.
The requirements pursuant to Section 315a of the German Commercial Code regarding
the preparation of the consolidated financial statements in accordance with IFRS, as applicable within the EU, are met.
Over and above the disclosure obligations pursuant to IFRS, the particulars and notes required under German commercial law are published.
Effects of new or revised standards
Standard/
Interpretation
Mandatory from
Adopted by EU
Commission*
Effects
IFRS 6
Exploration for and evaluation of mineral resources
Jan. 1, 2006
yes
none
IAS 21
The Effects of Changes in Foreign Exchange Rates –
Net Investment in a Foreign Operation
Jan. 1, 2006
yes
none
IAS 39
Financial Instruments: Recognition and Measurement
and IFRS 4 Insurance Contracts – Financial guarantee
contracts
Jan. 1, 2006
yes
none
IAS 39
Financial Instruments: Recognition and Measurement:
cash flow hedge accounting and fair value hedge
accounting
Jan. 1, 2006
yes
none
IFRIC 4
Determining Whether an Arrangement Contains a Lease
Jan. 1, 2006
yes
no significant
IFRIC 5
Rights to Interests Arising from Decommissioning,
Restoration and Environmental Rehabilitation Funds
Jan. 1, 2006
yes
none
IFRIC 6
Liabilities arising from Participating in a Specific
Market – Waste Electrical and Electronic Equipment
Dec. 1, 2005
yes
none
* At December 31, 2006.
170
New or revised standards not applied
Standard/
Interpretation
Mandatory from
Adopted by EU
Commission*
Anticipated
effects
IFRS 7
Financial Instruments: Disclosures
Jan. 1, 2006
yes
notes
IFRS 8
Operating Segments
Jan. 1, 2009
no
segment
reporting
IAS 1
Presentation of Financial Statements – particulars of
capital
Jan. 1, 2007
yes
notes
IFRIC 7
Applying the Restatement Approach under IAS 29
Financial Reporting in Hyperinflationary Economies
Mar. 1, 2006
yes
none
IFRIC 8
Scope of IFRS 2
May 1, 2006
yes
none
IFRIC 9
Reassessment of Embedded Derivatives
Jun. 1, 2006
yes
no significant
IFRIC 10
Interim Financial Reporting and Impairment
Nov. 1, 2006
no
not foreseeable
IFRIC 11
IFRS 2: Group and Treasury Share Transactions
Mar. 1, 2007
no
none
IFRIC 12
Service Concession Arrangements
Jan. 1, 2008
no
none
* At December 31, 2006.
Presentation of anticipated return on plan assets pursuant to IAS 19
From the 2006 financial year, the anticipated return on plan assets is presented in the financial result, for ease of comparison. For the 2005 financial year, the anticipated return on plan
assets (EUR 11 million) recognised in the functional areas were reclassified under the financial result.
The Group
In addition to AUDI AG, the consolidated financial statements include all principal companies where AUDI AG directly or indirectly has scope for determining the financial and business policy in such a way that other group companies benefit from the activities of the
companies in question (subsidiaries). Consolidation begins at that point in time from which
it acquires the opportunity for control; it ends when that opportunity ceases to be available.
Companies where AUDI AG is able to exercise significant direct or indirect influence on
financial and operating policy decisions (“associates”) are accounted for using the equity
method.
The following changes to the consolidated companies occurred in the past financial year:
the fully consolidated companies Audi Synko GmbH and Audi Zentrum Hannover GmbH, as
well as Audi Zentrum Stuttgart GmbH & Co. KG, which was accounted for using the equity
method, have been withdrawn from the group.
Subsidiaries excluded from consolidation and participating interests are always reported
at their cost of purchase, as no active market exists for the shares of these companies and
no fair value can reliably be determined with a justifiable amount of effort. These subsidiaries are substantially dormant companies or companies with only limited business operations.
171
The following table shows the composition of the Audi Group:
Total
2006
2005
AUDI AG and fully consolidated subsidiaries
Germany
3
5
12
12
Germany
0
1
Other countries
2
2
10
10
Other countries
Enterprises whose shares are accounted for
using the equity method
Subsidiaries reported at cost of purchase and other associates
Germany
Other countries
7
5
34
35
The principal companies within the Audi Group are listed after the Notes. A list of all companies in which shares are held is filed with the Ingolstadt Commercial Register under
HR B 1, and published on the Audi website under www.audi.com/subsidiaries. This list can
in addition be requested directly from AUDI AG, Finance Analysis and Publications I/FF-12,
85045 Ingolstadt, Germany.
As a result of their inclusion in Audi’s consolidated financial statements, quattro GmbH,
Neckarsulm, and Audi Vertriebsbetreuungsgesellschaft mbH, Ingolstadt, satisfy the conditions of Section 264 Para. 3 of German Commercial Code and make use of the exemption
rule.
Consolidation principles
The assets and liabilities of the domestic and foreign companies included in the consolidated financial statements are accounted for in accordance with the standard accounting
policies of the Audi Group.
For subsidiaries fully consolidated for the first time, the assets and liabilities are to be
measured at their fair value at the time of acquisition. Thus, differences between preacquisition carrying amounts and fair values of assets acquired and liabilities assumed are
carried, depreciated or dissolved in accordance with the corresponding assets and liabilities. If the purchase prices of the shares exceed the group’s interest in the equity calculated
in this way for the individual company, goodwill arises. Goodwill acquired in a business
combination is tested for impairment regularly, at the balance sheet date, and an impairment loss recognised if necessary.
Receivables and liabilities between consolidated companies are offset, and expenses and
income eliminated. Intra-group profits and losses are eliminated from group inventories and
fixed assets.
Consolidation processes affecting income are subject to deferrals of income taxes, with
deferred tax assets and liabilities offset where the term and tax creditor coincide.
The same accounting policies are used to determine the pro rata equity for the companies of the Audi Group that are measured using the equity method (FAW-Volkswagen Automotive Company, Ltd., Changchun (China), and YANASE Audi Sales Company Ltd., Tokyo
(Japan)). The last set of audited accounts of the company in question serves as the basis for
this purpose.
172
Currency translation
The currency of the Audi Group is the euro (EUR).
Foreign currency transactions in the separate financial statements of AUDI AG and the
subsidiaries are translated at the prevailing exchange rate on the date of the transaction.
Monetary items in foreign currency are reported at the balance sheet date on the basis of
the exchange rate on that date. Exchange differences are recognised in the current-period
income statements of the respective group companies.
The foreign companies belonging to the Audi Group are foreign entities which prepare
their financial statements in their local currency. The only exceptions are AUDI HUNGARIA
MOTOR Kft. and Audi Volkswagen Middle East FZE, which prepare their annual financial
statements in euros and US dollars respectively, rather than in local currency. The concept
of the “functional currency” is applied when translating financial statements prepared in
foreign currency. Assets and liabilities are translated at the closing rate. The effects of foreign currency translation on equity are reported in the currency exchange reserve. The items
in the income statement are translated using weighted average monthly rates. Exchange
differences resulting from the use of diverging exchange rates in the balance sheet and
income statement are recognised in equity with no effect on the income statement.
1 EUR=
Dec. 31, 2006
Dec. 31, 2005
Closing rate
Australia
2006
2005
Average rate
AUD
1.6691
1.6109
1.6667
Brazil
BRL
2.8152
2.7608
2.7336
3.0368
People’s Republic of China
CNY
10.2793
9.5204
10.0082
10.2025
Japan
1.6320
JPY
156.9300
138.9000
146.0624
136.8482
South Korea
KRW
1,224.8100
1,184.4200
1,198.1480
1,273.6043
United Arab Emirates
USD
1.3170
1.1797
1.2557
1.2441
As all consolidated subsidiaries have their registered offices in countries in which there is
currently no hyperinflation, IAS 29 does not apply.
Recognition and measurement principles
Recognition of income and
expenses
Revenue is always recorded at the time of rendering of the services or delivery of the goods
or products, in other words upon passage of risk to the customer. The percentage of completion method is only applied in exceptional cases, as the dates on which a service is commenced and completed regularly fall within the same accounting period.
Proceeds from the sale of vehicles for which buy-back agreements exist are realised not
immediately, but at a linear rate over the rental period, on the basis of the difference between the selling price and the anticipated buy-back price. These vehicles are reported under inventories.
Operating expenses are recognised when the service is rendered or at the time they are
incurred economically.
Intangible assets
Intangible assets acquired for consideration are recognised at cost of purchase, taking account of ancillary costs and cost reductions, and amortised on a scheduled straight-line
basis over their useful life.
173
Concessions, rights and licences relate to purchased computer software and subsidies paid.
Research costs are treated as current expenses in accordance with IAS 38. The development expenditure for products going into series production is recognised as an intangible
asset, provided that the production of these products is likely to bring economic benefit to
the Audi Group. If the conditions for recognition as an intangible asset are not met, the
expenditure is recognised as an expense in the income statement in the year in which it
occurs.
Development expenditure recognised as an intangible asset comprises all direct costs
and overheads directly allocable to the development process. Borrowing costs are not capitalised. Amortisation is performed on a straight-line basis from the start of production, over
the anticipated model life of the developed products.
The amortisation plan is based principally on the following useful lives:
Useful life
Concessions, industrial property rights and similar rights and values
of which software
Development expenditure recognised as an intangible asset
3-15 years
3 years
5-10 years
The amortisation is allocated to the corresponding functional areas.
Goodwill acquired in a business combination is recognised pursuant to IAS 36 and tested
for impairment regularly, at the balance sheet date. If necessary, an impairment loss resulting from this test is recognised.
Property, plant and
equipment
Property, plant and equipment are measured at cost, less scheduled straight-line depreciation according to the pro rata temporis method.
The costs of purchase include the purchase price, ancillary costs and cost reductions.
In the case of self-constructed fixed assets, the cost of construction includes both the directly allocable cost of materials and cost of labour, and indirect materials and indirect labour which must be capitalised, together with pro rata depreciation. Interest on borrowings
is not included.
The depreciation plan is based on the following useful lives, which are reassessed yearly:
Useful life
Buildings
25-33 years
Plant fixtures
10-18 years
Plant and machinery
6-12 years
Furniture and fixtures, including special tools
3-15 years
Minor assets with a cost of purchase of up to EUR 410 are fully depreciated in the year of acquisition.
174
In accordance with IAS 17, property, plant and equipment used on the basis of lease
agreements are recognised in the balance sheet if the conditions of a financial lease are
met, in other words if the significant risks and opportunities which result from their use
have passed to the lessee. Recognition is performed at the time of the agreement, at cost or
at the present value of the minimum lease payments if lower. The straight-line depreciation
method is based on economic life, or on the term of the lease contract if shorter. The payment obligations resulting from the future lease instalments are recognised as a liability at
the present value of the leasing instalments.
Investment property
Investment property is measured at amortised cost. Buildings are depreciated on the basis
of a useful life of 33 years.
Investments accounted for
using the equity method
Companies where AUDI AG is able to exercise significant direct or indirect influence on
financial and operating policy decisions (associates) are accounted for using the equity
method.
Impairment tests
Fixed assets are tested regularly for impairment at the balance sheet date. To test for impairment, cash flows anticipated in the future are discounted at rates of between 9.0 and 9.8
percent.
Impairment loss pursuant to IAS 36 is recognised where the recoverable amount from
the use of the asset in question has fallen below its carrying amount.
Within the Audi Group, the value in use of the cash-generating unit in question, determined according to the entity method, is used in the annual assessment of goodwill impairment. The planning data is compiled on the basis of available knowledge and is influenced by the prevailing macroeconomic developments, as well as by past developments.
The planning period extends over five years, with plausible assumptions on future developments made for subsequent years.
If the reasons for impairment performed in previous years cease to apply, the impairment
loss is reversed. Goodwill impairment, however, remains unchanged pursuant to IAS 36.
Financial assets
IAS 39 subdivides financial assets (financial instruments) into the following categories:
– financial assets at fair value through profit or loss,
– loans and receivables,
– held-to-maturity investments,
– available-for-sale financial assets.
Financial liabilities are divided into the following categories:
– financial liabilities at fair value through profit or loss,
– financial liabilities measured at amortised cost.
The classification depends on the respective purpose for which a financial asset has
been acquired, and is reassessed at each balance sheet date. No financial instruments in the
category of “held-to-maturity investments” are in use within the Audi Group.
Financial assets include both primary instruments and derivative instruments. Derivative
financial instruments are used as a hedge for items on the balance sheet and for future cash
flows.
Where financial instruments are purchased or sold in the customary manner, they are
recognised using settlement date accounting, in other words at the value on the day on
which the asset is delivered.
175
Where hedging instruments that serve currency or price hedging purposes according to
business administration criteria do not satisfy the special eligibility requirements of IAS 39
in full, they are classified as “financial instruments at fair value through profit or loss”.
Financial instruments are reported at amortised cost (using the effective interest
method) or at fair value. They are derecognised if the rights to payments from the investment have expired or been transferred and the Audi Group has in essence transferred all
risks and opportunities associated with their title.
The amortised cost of a financial asset or financial liability, using the effective interest
method, is the amount at which the financial asset or liability was measured at initial recognition minus principal repayments and any impairment losses. Receivables and liabilities
denominated in foreign currencies are measured at the middle rate on the balance sheet
date. In the case of liabilities, amortised costs always correspond to the nominal or settlement value.
The fair value generally corresponds to the market value or quoted market price. If no active market exists, the fair value is determined by means of investment mathematics methods. These comprise references to recently completed transactions between independent
business partners, the use of the current market prices of other assets that are essentially
similar to the asset in question, discounted cash flow methods, and option pricing models
that take account of the specific circumstances of the issuer.
It is assessed at each balance sheet date whether there is any objective basis for impairment of a financial asset or group of financial assets.
Primary financial instruments
Investments in subsidiaries excluded from consolidation and participating interests are
generally shown at their respective cost of purchase, as no active market exists for these
companies and no fair value can reliably be determined with a justifiable amount of effort.
Loans and receivables originated by the enterprise, as well as liabilities, are measured at
amortised cost. These include in particular
– loans advanced,
– trade receivables and payables,
– other current assets and liabilities.
In the case of current items, the fair values to be indicated additionally in the Notes correspond to the amortised cost. For non-current assets and liabilities with more than one
year to maturity, fair values are determined by discounting future cash flows at market
rates.
Liabilities from financial lease agreements are carried at the present value of the leasing
instalments.
Available-for-sale financial assets are always measured at their fair value. In the case of
quoted financial instruments – within the Audi Group, these comprise exclusively securities
– the fair value corresponds to the market value on the balance sheet date. The fluctuations
in value of available-for-sale securities are accounted for within a separate equity reserve
with no effect on income, after taking account of deferred tax. Unless there is evidence of
lasting impairment, the financial result includes only gains or losses realised from sales.
However, if there is evidence of a lasting fall in the value of securities, the accumulated loss
is booked against the equity reserve and recognised in the income statement; once impairment losses have been included in the income statement, they are no longer reversed by
recognition in the income statement. In the 2006 financial year – as in previous years – there
was no evidence of lasting impairment of the securities portfolio.
176
Derivative financial instruments and hedge accounting
Derivative financial instruments are used as a hedge for items on the balance sheet and for
future cash flows. Derivative financial instruments, e.g. futures and options, are the principal hedging instruments used.
In the case of hedges against the risk of changes in value of balance sheet items (fair
value hedges), both the hedging transaction and the hedged risk portion of the underlying
transaction are recognised at fair value. Changes in the value of hedging and underlying
transactions are included in the financial result.
When hedging future cash flows, the fluctuations in the market value of the effective portion of a derivative financial instrument are initially reported in a special reserve within
equity with no effect on income, and are only recognised as income or expense once the
hedged item is due. The ineffective portion of a hedge is recognised immediately in income.
Derivative financial instruments that serve currency or price hedging purposes according
to business administration criteria but do not satisfy the strict criteria of IAS 39 are measured at fair value through profit or loss.
Deferred tax
Pursuant to IAS 12, deferred tax is determined according to the balance sheet focused liability method. This method specifies that tax deferrals are to be created for all temporary differences between the tax base of assets and liabilities and the carrying amounts of them in
the consolidated financial statements (temporary concept). Deferred tax assets regarding
the carryforward of unused tax losses are in addition to be recognised.
Deferrals amounting to the anticipated tax burden or tax relief in subsequent financial
years are created on the basis of the likely tax rate at the time of realisation. In accordance
with IAS 12, the tax consequences of distributions of profit are not recognised until the
resolution on the appropriation of profits is passed.
Deferred tax assets include future tax relief resulting from temporary differences between the carrying amounts in the consolidated balance sheet and the valuations in the
balance sheet for tax purposes. Deferred tax assets for the carryforward of unused tax
losses that can be realised in the future and from tax relief are also to be recognised.
Deferred tax assets and deferred tax liabilities are offset, provided there is identity of the
tax creditors and maturities.
Pursuant to IAS 1.70, deferred tax is reported as non-current.
A reduction of the carrying amount is performed for deferred tax assets which are
unlikely to be realised.
Inventories
Raw materials and supplies are measured at the updated average cost of purchase or at the
lower net realisable value (net selling price). Other costs of purchase and purchase cost
reductions are taken into account as appropriate.
Work in progress and finished goods are valued at cost of conversion or at the lower net
realisable value. The cost of conversion includes direct materials and direct labour, as well
as a systematically allocated portion of the necessary indirect materials and indirect labour,
production-related depreciation and expenses allocable to the products from the amortisation of series development expenditure recognised as an intangible asset. Distribution
costs, administrative expenses and interest on borrowings are not capitalised.
Merchandise is valued at cost of purchase or at the lower net realisable value.
177
Provision has been made for all discernible storage and inventory risks by way of appropriate write-downs. Individual downward valuation adjustments are made on all inventories
as soon as the probable proceeds from their sale or use are lower than the carrying
amounts of the inventories. The estimated selling price less the estimated costs incurred up
until their sale is regarded as the net realisable value of inventories.
Securities, cash and cash
equivalents
Securities held as current assets are measured at market value, in other words at the quoted
market price at the balance sheet date.
Cash and cash equivalents are measured at nominal value.
Defined benefit liabilities
The actuarial measurement of defined benefit liabilities is based on the Projected Unit
Credit Method for defined retirement benefit plans as specified in IAS 19 (Employee Benefits). This method takes account of pensions and entitlements to future pensions known at
the balance sheet date as well as anticipated future pay and pension increases.
In accordance with IAS 37, provisions are recognised if an obligation existing towards third
Other provisions
parties is likely to lead to cash outflows and where the amount of the obligation can reliably
be estimated.
Pursuant to IAS 37, the other provisions for all discernible risks and uncertain liabilities
are reported at their probable cost and not offset against recourse entitlements.
Provisions with over one year to maturity are measured at their discounted settlement
value at the balance sheet date. Interest rates in real terms of between 2.0 and 2.3 percent
are used as the discount rates. The settlement value also includes the cost increases to be
taken into account at the balance sheet date, according to IAS 37.
Notes to the consolidated income statement
1
Revenue
The revenue of the group, by brand, is made up as follows:
EUR million
Audi brand
Lamborghini brand
2006
2005
23,404
19,370
322
226
2,772
2,611
SEAT brand
374
347
Škoda brand
193
225
Volkswagen brand
Bentley brand
Total revenue from vehicles
Other sales
Total revenue
3
–
27,068
22,779
4,074
3,812
31,142
26,591
Revenue is categorised by region for the purpose of segment reporting, along the same
lines as those used for internal group steering and reporting.
The other sales constitute goods and services supplied to affiliated companies and sales
to third parties.
178
2
Cost of sales
The cost of sales comprises the costs incurred in generating revenue and purchase prices in
trading transactions. This item also includes expenses resulting from the creation of provisions for warranty costs as well as development expenditure which cannot be recognised as
an intangible asset.
The cost of sales rose underproportionally compared with revenue in 2006. The cost of
sales included EUR 547 (–) million in impairment losses on intangible assets and property,
plant and equipment.
3
Distribution costs
Distribution costs substantially comprise expenses for marketing and sales promotion, advertising, public relations activities and outward freight, as well as depreciation for the sales
sector.
4
Administrative expenses
The administrative expenses include labour and materials costs, as well as depreciation for
the administrative sector.
5
Other operating income
EUR million
2006
2005
Income from the reversal of provisions and accruals
326
153
Income from rebilling
324
282
Income from ancillary business
88
75
Income from realised derivative currency hedging transactions
87
44
Income from the processing of payments in foreign currency
54
66
Income from the reversal of reductions for impairment on
receivables and other assets
13
8
8
7
151
155
1,051
790
Income arising from asset disposals
Miscellaneous operating income
Total other operating income
Income from the processing of payments in foreign currency substantially comprises gains
resulting from exchange-rate movements between the dates of output and payment, and
exchange-rate gains as a result of measurement at the average rate on the closing date. In
the same way, exchange rate losses are reported under other operating expenses.
The overall item of hedging instruments is shown under other particulars (item 1.1).
179
6
Other operating expenses
EUR million
Expense from realised derivative currency hedging transactions
2006
2005
164
111
Expense from the processing of payments in foreign currency
72
56
Expenses from the allocation of costs and rebilling
57
19
Losses arising from asset disposals
22
32
Expenses from the measurement of currency option premiums
10
39
Impairment losses on receivables
10
14
Miscellaneous operating expenses
133
147
Total other operating expenses
468
418
The losses arising from asset disposals include expenses from disposals of development
expenditure recognised as an intangible asset as well as of property, plant and equipment.
The miscellaneous operating expenses include EUR 10 (46) million in write-down allocable to operations for the pro rata operating assets of a Brazilian partnership. The writedown stems from the recognition of pro rata losses from operating activities and from currency translation.
The overall item of hedging instruments is shown under other particulars (item 1.1).
7
Result from investments accounted for using the equity method
EUR million
2006
2005
Income from investments accounted for using the equity method
18
–
Expense from investments accounted for using the equity method
1
12
+ 17
– 12
2006
2005
Other interest and similar expenses
128
126
of which to affiliated companies
122
123
128
126
Interest on employee benefit obligations
91
90
Interest on other provisions
35
24
126
114
Total result from investments accounted for
using the equity method
8
Finance cost
EUR million
Interest expense
Total interest expense
Interest on provisions
Total interest on provisions
Interest expense is attributed on an accrual basis.
180
9
Other financial results
EUR million
2006
2005
Investment result
– 35
+ 26
23
22
Income from investments in affiliated companies
Income from profit transfer agreements
Expenses from investments in affiliated companies
Income from the sale of securities
5
4
– 63
–
7
31
Expense from the sale of securities
–5
–
Income from the measurement of commodity futures
23
–
Expense from the measurement of commodity futures
–9
–
Other interest and similar income
187
98
of which from affiliated companies
Total other financial results
134
65
+ 168
+ 155
The income from investments in affiliated companies relates above all to a share in the
profits of Volkswagen Logistics GmbH & Co. OHG, Wolfsburg.
Of the expenses from investments in affiliated companies, the sum of EUR 59 million is
attributable to an impairment loss on the investment in a Brazilian partnership.
The overall item of hedging instruments is shown under other particulars (item 1.1). Interest income is attributed on an accrual basis.
10
Income tax expense
Income tax expense includes taxes passed on by Volkswagen AG on the basis of the singleentity relationship between the two companies for tax purposes, along with taxes owed by
AUDI AG and its consolidated subsidiaries, as well as deferred taxes.
Tax expense consists of the following:
EUR million
2006
2005
Current income tax expense
1,207
707
of which for Germany
1,119
673
of which for other countries
of which income from the reversal of tax provisions
Deferred tax income
of which for Germany
of which for other countries
Total income tax expense
of which tax income not relating to the period
of which deferred tax expense from the measurement of tax
relief and tax loss carryforwards
88
34
0
–3
– 604
– 221
– 614
– 207
10
– 14
603
486
– 138
–8
86
1
Of the current tax expense, an amount of EUR 1,118 (673) million was passed on by Volkswagen AG.
181
The current taxes in Germany are calculated at the tax rate of 38.3 (38.3) percent. This
represents the sum of the corporate income tax rate of 25.0 percent, the solidarity surcharge
of 5.5 percent and the average trade earnings tax rate for the group. Deferred taxes are likewise calculated at a rate of 38.3 percent in the financial year under review, as in the previous
year.
The national income tax rates applicable for foreign companies range from 0 percent to
40 percent.
Due to the current statutory framework in Hungary, the deferred tax assets for AUDI
HUNGARIA MOTOR Kft. for tax relief on capital investments were reduced by EUR 86 million,
as no taxable income is expected until tax exemption expires in 2011. The effects arising as a
result of the tax benefits on research and development expenditure in Hungary are reported
in the reconciliation accounts under tax-exempt income.
There exist loss carryforwards totalling EUR 94 million, of which an amount of EUR 88
million can be used indefinitely. The realisation of tax losses resulted in a reduction of
EUR 20 (15) million in current income tax expense in the 2006 financial year. Deferred tax
assets totalling EUR 88 million were not carried for reasons of impairment. Unused tax loss
carryforwards accounted for EUR 2 million of this amount, and tax rebates for the remaining
EUR 86 million.
Deferred tax totalling EUR – 282 (194) million relates to business transactions reported
directly in equity. One portion amounting to EUR – 109 (123) million relates to defined benefit liabilities and another portion of EUR – 173 (71) million relates to derivative financial instruments.
Deferred tax effects of EUR – 8 (–) million resulted from tax-rate changes.
182
The following deferred tax assets and liabilities carried in the balance sheet are attributable
to the individual balance sheet items:
EUR million
Dec. 31, 2006
Dec. 31, 2005
Deferred tax assets
Dec. 31, 2006
Dec. 31, 2005
Deferred tax liabilities
Intangible assets
127
38
608
724
Property, plant and equipment
181
84
239
290
Long-term investments
114
91
5
–
Inventories
44
40
38
43
Receivables and other assets
22
22
153
10
Other current assets
93
221
5
33
Defined benefit liabilities
199
305
–
0
Other provisions
860
578
89
46
Liabilities
100
81
14
11
22
35
–
–
1,762
1,495
1,151
1,157
1,183
1,066
748
859
– 1,136
– 1,116
– 1,136
– 1,116
10
25
–8
11
636
404
7
52
–
–1
–
–
636
403
7
52
Loss carryforwards
Gross value
of which non-current
Offsetting measures
Consolidation measures
Reclassifications pursuant to IFRS 5
Carrying amount
Deferred taxes are explained in greater detail in the recognition and measurement
principles.
Reconciliation from anticipated to reported income tax expense
The anticipated tax expense is above the reported income tax expense. The reasons for the
difference between the anticipated and reported tax expense are illustrated by the following
reconciliation:
EUR million
2006
2005
Profit before tax
1,946
1,310
745
502
– 84
– 72
– 58
– 65
23
28
Anticipated income tax expense 38.3 % (38.3 %)
Progression:
Divergent foreign tax burden
Tax portion for:
tax-exempt income
expenses not deductible for tax purposes
temporary differences and losses for which no deferred tax
has been recorded
Tax income/expense not relating to the period
Effects of tax-rate changes
Other tax effects
64
79
– 138
–8
–8
–
59
22
Income tax expense reported
603
486
Effective tax rate in %
31.0
37.1
183
The tax income not relating to the period substantially relates to deferred tax resulting from
adjustments following tax audits.
11
Profit transfer to Volkswagen AG
An amount of EUR 856 (462) million is to be transferred to Volkswagen AG on the basis of
the profit transfer agreement.
12
Earnings per share
Basic earnings per share are calculated by dividing the profit share due to AUDI AG shareholders by the weighted average number of shares outstanding during the financial year.
In Audi’s case, the diluted earnings per share are the same as the basic earnings per
share, as there were no potential shares in AUDI AG in existence at either December 31, 2005
or December 31, 2006.
Profit share of AUDI AG shareholders in EUR million
Weighted average number of shares (basic and diluted
totals are identical)
Earnings per share in EUR
2006
2005
1,343
824
43,000,000
43,000,000
31.24
19.17
Outside shareholders in AUDI AG receive a compensatory payment for each individual share
certificate instead of a dividend for the 2006 financial year. The level of this payment corresponds to the dividend that is paid on one Volkswagen AG ordinary share. The dividend
payment will be determined by the Annual General Meeting of Volkswagen AG on April 19,
2007.
Notes to the consolidated balance sheet
13
Intangible assets
EUR million
Concessions, industrial property rights and similar rights and
values, as well as licences thereto
Goodwill
Dec. 31, 2006
Dec. 31, 2005
79
149
172
172
Development expenditure recognised as an intangible asset for
products currently in development
products currently in use
Payments on account for intangible assets
852
739
1,230
1,623
2
2
2,335
2,685
The goodwill results from the consolidation in full of AUTOGERMA S.p.A., Verona (Italy).
184
In accordance with IAS 36, impairment of this goodwill is tested at the end of the year.
The Audi Group uses the value in use as the basis for determining any possible impairment.
The planning data was prepared on the basis of available knowledge. A slight increase in
demand for cars in Italy is expected.
Research and development expenditure recognised as an expense
EUR million
2006
2005
Research expenditure and development expenditure
not recognised as an intangible asset
1,077
999
905
586
1,982
1,585
Amortisation and disposals of development expenditure
recognised as an intangible asset
Total research and development expenditure
recognised as an expense
Spending on research and development activities in the 2006 financial year totalled
EUR 1,702 (1,542) million. Of this total, EUR 625 (544) million satisfy the criteria for recognition as an asset according to IAS 38.
14
Property, plant and equipment
EUR million
Dec. 31, 2006
Dec. 31, 2005
Land, land rights and buildings, including buildings on land
owned by others
1,692
1,702
Plant and machinery
1,054
1,152
Furniture, fixtures and office equipment
1,699
2,014
1
3
of which finance lease
Payments on account and assets in course of construction
578
353
5,023
5,221
The carrying amounts for the item “Finance lease” correspond to the fair values.
Payments totalling EUR 57 (53) million for assets rented on the basis of operating lease
agreements were recognised as an expense.
There are no significant restrictions on ownership and disposal for the reported property,
plant and equipment.
15
Investment property
Land and buildings held for the purpose of generating rental income (investment property
pursuant to IAS 40) are reported under investment property. The fair value of investment
property amounts to EUR 9 (10) million.
185
16
Other long-term investments
EUR million
Investments in affiliated companies
Participating interests
Dec. 31, 2006
Dec. 31, 2005
32
97
9
9
41
106
The change in investments in affiliated companies stems principally from the impairment
loss on the investment in a Brazilian partnership (cf. sections 6 and 9).
17
Deferred tax assets
The temporary differences between tax bases and carrying amounts in the consolidated
balance sheet are explained in the recognition and measurement principles under the item
“Deferred tax”. Pursuant to IAS 1 (revised 2005), deferred tax liabilities are reported as noncurrent liabilities irrespective of their maturities.
18
Other receivables and other financial assets
There are no significant restrictions on ownership or disposal for the reported receivables
and other assets.
Derivative financial instruments are measured at market value. The overall item of hedging
instruments is shown under other particulars (item 1.1).
Non-current other receivables and other financial assets
EUR million
Loans advanced to affiliated companies
Loans advanced to associates
Other loans advanced
Other receivables from affiliated companies
Dec. 31, 2006
Dec. 31, 2005
1
1
13
14
1
2
81
3
of which from derivative currency hedging instruments
(cash flow hedges)
63
3
of which from commodity futures
17
–
7
29
Other tax assets
Other assets
10
2
113
51
The loans advanced have a fair value of EUR 15 (17) million. The non-current other assets
have a fair value of EUR 98 (34) million.
186
Current other receivables and other financial assets
EUR million
Dec. 31, 2006
Dec. 31, 2005
481
98
310
82
Other receivables from affiliated companies
of which from derivative currency hedging instruments
(cash flow hedges)
of which from commodity futures
Other receivables from associates
Other tax assets
Other assets
6
–
5
17
55
67
230
202
771
384
All current other receivables and financial assets are due within one year of the balance
sheet date. The carrying amounts correspond to the fair values.
19
Inventories
EUR million
Dec. 31, 2006
Dec. 31, 2005
Raw material and supplies
373
367
Work in progress
316
279
1,418
1,396
Finished goods and merchandise
Payments on account for inventories
2
0
2,109
2,042
Inventories amounting to EUR 27,442 (23,552) million were booked to the cost of sales at the
same time that revenue from them was realised.
The write-down as a result of the measurement of inventories on the basis of sales market amounted to EUR 44 (106) million.
No reversal of write-downs was performed in the financial year. There are no significant
restrictions on ownership or disposal for the reported inventories.
20
Trade receivables
EUR million
Dec. 31, 2006
Dec. 31, 2005
third parties
972
1,010
affiliated companies
709
371
joint ventures, associates and other investments
159
117
1,840
1,498
Trade receivables from
The fair value of trade receivables amounts to EUR 1,840 (1,498) million.
The trade receivables not realised until more than twelve months after the balance sheet
date amount to EUR 4 (3) million.
187
21
Effective income tax assets
Entitlements to income tax rebates predominantly for foreign group companies are reported
under this item.
22
Assets and liabilities held for sale
There were no assets or liabilities held for sale at December 31, 2006. The assets and liabilities held for sale in the previous year concerned exclusively Audi Synko GmbH, which was
sold with effect from January 1, 2006. The profit from the sale was booked to other operating income.
23
Securities
Securities held as current assets comprise fixed-interest or variable-interest securities and
shares. The rates of return ranged between 2.28 percent and 4.38 percent.
24
Cash and cash equivalents
Cash and cash equivalents comprise largely balances with banks and affiliated companies
amounting to EUR 4,884 (3,105) million.
The rates of return for overnight money and term money ranged between 2.21 percent
and 3.71 percent.
Balances existed with various banks and in various currencies. Liquid funds were invested with affiliated companies via the cash pooling arrangements.
188
EQUITY
25
EUR million
Position at Jan. 1, 2005
Changes in equity
Issued
capital
Capital
reserve
Retained earnings
Equity
Legal
reserve
and other
retained
earnings
Currency
exchange
reserve
Reserve
for cash
flow
hedges
Reserve for
marketprice
measurement of
securities
Reserve
pursuant
to IAS 19
Minority
interests
Overall
110
57
5,833
– 47
32
–
– 161
4
5,828
Currency adjustments
–
–
1
34
–
–
–
–
35
Transfer to retained
earnings
–
–
362
–
–
–
–
–
362
Changes in
measurement not
affecting income
–
–
–
–
– 199
26
– 321
–
– 494
Result from the sale of
securities
–
–
–
–
–
– 31
–
–
– 31
Result from settled
cash flow hedges
–
–
–
–
14
–
–
–
14
Tax items credited
directly to equity
–
–
–
–
69
2
123
–
194
Differences from
changes in consolidated
companies
–
–
–2
–
–
–
7
–
5
Dividends paid
–
–
–
–
–
–
–
–2
–2
Withdrawal of holders of
minority interests
–
–
–
–
–
–
–
–2
–2
Capital contributions
–
195
–
–
–
–
–
–
195
Position at Dec. 31, 2005
110
252
6,194
– 13
– 84
–3
– 352
–
6,104
Currency adjustments
–
–
1
– 16
–
–
–
–
– 15
Transfer to retained
earnings
–
–
487
–
–
–
–
–
487
Changes in
measurement not
affecting income
–
–
–
–
471
4
284
–
759
Result from the sale of
securities
–
–
–
–
–
0
–
–
–
Result from settled
cash flow hedges
–
–
–
–
– 19
–
–
–
– 19
Tax items credited
directly to equity
–
–
–
–
– 171
–2
– 109
–
– 282
Differences from
changes in consolidated
companies
–
–
–
–
–
–
–
–
–
Dividends paid
–
–
–
–
–
–
–
–
–
Withdrawal of holders of
minority interests
–
–
–
–
–
–
–
–
–
Capital contributions
–
231
–
–
–
–
–
–
231
110
483
6,682
– 29
197
–1
– 177
–
7,265
Position at Dec. 31, 2006
189
The issued capital of AUDI AG totals EUR 110,080,000.00. Each share represents a mathematical share of EUR 2.56 in the issued capital. It is divided into 43,000,000 bearer individual
share certificates.
The capital reserves contain shareholder contributions from the issue of shares in the
company. In the year under review, it rose to EUR 483 million as a result of a contribution of
EUR 231 million by Volkswagen AG to the capital reserve of AUDI AG.
The opportunities and risks from foreign exchange contracts and currency option transactions serving as hedges for future cash flows are deferred with no effect on the income
statement in the reserve for cash flow hedges. When the cash flow hedges fall due, the
results from the settlement of the exchange-rate hedging contracts are reported in the other
operating result. Gains and losses from the measurement at fair value of financial assets
available for sale are recognised in the reserve for the market-price measurement of securities. Adjustments to actuarial assumptions on retirement benefit obligations are recognised
in the reserve for IAS 19.
The balance of EUR 487 (362) million remaining after the transfer of profit to Volkswagen
AG is allocated to the other retained earnings.
LIABILITIES
26
Financial liabilities
Non-current financial liabilities
EUR million
Dec. 31, 2006
Dec. 31, 2005
Liabilities to banks
3
14
Liabilities from financial lease agreements
0
1
3
15
Non-current financial liabilities with a time to maturity of more than five years amount to
EUR 1 (2) million. The carrying amounts correspond to the fair values.
Current financial liabilities
EUR million
Liabilities to affiliated factoring companies
Liabilities from cash pooling to affiliated companies
Liabilities from cash pooling to enterprises in which the company
has participating interests
Liabilities to banks
Liabilities from financial lease agreements
Dec. 31, 2006
Dec. 31, 2005
140
112
24
14
0
5
45
33
1
1
210
165
Measurement of the non-current and current financial lease agreements is based on an
interest rate of 4.6 percent p.a. in each case.
190
27
Deferred tax liabilities
The temporary differences between tax bases and carrying amounts in the consolidated
balance sheet are explained in the recognition and measurement principles under the item
“Deferred tax”. Pursuant to IAS 1 (revised 2005), deferred tax liabilities are reported as noncurrent liabilities irrespective of their maturities.
28
Other liabilities
The derivative currency hedging instruments reported under other liabilities are measured
at market values. The overall item of currency hedging instruments is shown under other
particulars (item 1.1).
Non-current other liabilities
EUR million
Dec. 31, 2006
Dec. 31, 2005
Carrying amounts
Liabilities to affiliated companies
of which from derivative currency hedging instruments
(cash flow hedges)
of which in respect of social insurance
Dec. 31, 2005
Fair values
131
42
114
38
17
30
17
30
6
–
6
–
70
39
70
39
20
3
20
3
201
81
184
77
of which from commodity futures
Other liabilities
Dec. 31, 2006
Other liabilities with a time to maturity of more than five years amount to EUR 148 (56) million.
Current other liabilities
EUR million
Liabilities to affiliated companies
of which from derivative currency hedging instruments
(cash flow hedges)
of which from commodity futures
Liabilities to associates
Dec. 31, 2006
Dec. 31, 2005
1,112
854
38
149
4
–
16
–
Advances received for orders from customers
170
63
Other liabilities
811
698
106
120
of which taxes
of which in respect of social insurance
94
117
2,109
1,615
191
29
Defined benefit liabilities
Defined benefit liabilities are created on the basis of plans to provide retirement, invalidity
and surviving dependents’ benefits. The benefit amounts generally depend on the length of
service and the remuneration of the employees.
Within the Audi Group, a distinction is made between benefit systems based on provisions and those financed externally via pension funds.
Obligations for retirement benefits both within Germany and in other countries are
measured according to the Projected Unit Credit Method pursuant to IAS 19. Here, the future
obligations are measured on the basis of benefit claims vested pro rata at the balance sheet
date. For purposes of measurement, trend assumptions are used for the relevant quantities
which affect the level of benefit.
The pension fund model introduced in Germany on January 1, 2001 is based on contribution-based retirement benefit commitments, which are classified as defined benefit plans
pursuant to IAS 19 (Employee Benefits). The remuneration-based annual cost of providing
employee benefits is invested in funds on a fiduciary basis by Volkswagen Pension Trust e.V.
This model offers AUDI AG employees the opportunity to increase their pension claims,
while providing full risk cover. As the units administrated on a fiduciary basis satisfy the
requirements of IAS 19 as plan assets, these funds were offset against the retirement benefit obligations.
The calculation is based on the following individual actuarial assumptions:
%
Remuneration trend
Retirement benefit trend
Dec. 31, 2006
Dec. 31, 2005
1.50–3.50
2.25–3.50
1.00
1.50
2.00–4.50
2.00–4.25
Fluctuation rate
2.00
1.40
Expected return on plan assets
5.00
5.00
Interest rate
The biometric mortality was determined using the “2005 G Reference Tables” by Dr. K.
Heubeck.
Progression from the present value of defined benefit obligations to the defined benefit
liabilities for meeting retirement benefit commitments recognised in the balance sheet:
EUR million
Present value of funded defined benefit obligations
Fair value of plan assets
Deficit
192
Dec. 31, 2006
Dec. 31, 2005
306
238
– 306
– 238
–
–
Present value of unfunded defined benefit obligations
1,974
2,180
Defined benefit liabilities recognised in the balance sheet
1,974
2,180
The experience adjustments, in other words the effects of differences between the previous
actuarial assumptions and what has actually occurred, are shown in the following table:
EUR million
2006
2005
2004
as % of the present value of the obligation
0.29
0.15
2.43
as % of the fair value of the plan asset
1.65
4.75
1.05
2006
2005
Current service cost for services provided by the employees
in the financial year
71
66
Past service cost
28
–
Interest cost
104
100
Expected return on plan assets
– 13
– 11
Total of expense and income recognised in the income statement
190
155
Difference between anticipated and
actual performance
The amounts recognised in the income statement are as follows:
EUR million
The interest element in pension costs is shown as interest cost in the other financial result.
The anticipated return on plan assets is likewise shown in the financial result.
There was an actual gain from plan assets of EUR 18 (22) million in the past financial
year.
The defined benefit liabilities recognised in the balance sheet are determined by offsetting the present value against the fund assets pursuant to IAS 19. The provisions changed
as follows:
EUR million
2006
2005
Defined benefit liabilities at January 1
2,180
1,820
–
– 10
190
155
Changes to the group
Employee benefit expenses
Actuarial gains / losses
– 284
322
Pension payments from company assets
– 61
– 57
Contributions paid to funds
– 50
– 50
Transfers received from affiliated companies
Transfers made to affiliated companies
Currency differences
Defined benefit liabilities at December 31
of which non-current
–1
2
1
–2
–1
0
1,974
2,180
1,913
2,121
193
Actuarial gains and losses result from changes in the number of people participating in the
pension scheme and from a deviation in the actual trends (for example, increases in pay or
retirement benefit) from the figures assumed for calculation purposes. In accordance with
IAS 19, such gains and losses are recognised under a separate item within equity, after taking account of deferred tax.
The present value of defined benefit obligations changed as follows:
EUR million
2006
2005
Present value at January 1
2,418
2,016
Service cost
99
66
Interest cost
104
100
Actuarial losses
Pension payments from company assets
– 279
334
– 61
– 57
Pension payments from fund assets
–
–1
Changes in consolidated companies
–
– 40
–1
–
2,280
2,418
2006
2005
238
196
13
11
5
12
Currency differences
Present value at December 31
The fund assets changed as follows:
EUR million
Fund assets at January 1
Expected net investment income
Actuarial gains
Employer contributions
Benefits paid
Changes in consolidated companies
Fund assets at December 31
50
50
0
–1
–
– 30
306
238
Employer contributions totalling EUR 48 million are expected for the following financial
year.
The fund assets are made up as follows:
194
% of fund assets
2006
2005
Shares
39.8
40.5
Fixed-interest securities
51.3
52.2
Cash in hand
7.3
7.3
Other
1.5
–
30
Effective income tax obligations
The effective income tax obligations consist primarily of tax liabilities to Volkswagen AG
from apportioning.
31
Other provisions
EUR million
Dec. 31, 2006
Obligations from sales
operations
Dec. 31, 2005
Total
Of which due
within one
year
Total
Of which due
within one
year
1,180
2,835
1,373
2,259
Workforce-related provisions
552
153
390
69
Other provisions
443
399
307
259
3,830
1,925
2,956
1,508
The obligations from sales operations comprise risks from the sale of vehicles, components
and original parts, including the disposal of end-of-life vehicles. These are for the most part
warranty claims that are determined on the basis of the previous or the estimated future
loss experience. This item in addition includes discounts, bonuses and similar due to be
granted and arising after the balance sheet date but occasioned by sales before the balance
sheet date.
The workforce-related provisions are created among other reasons for long-service
awards, pre-retirement part time arrangements, suggested improvements and ex gratia
payments.
The other provisions relate to a wide range of one-off risks.
The provisions changed as follows:
EUR million
Jan. 1, 2006
Consumed
Reversed
Allocated
Transferred
Compounded
Dec. 31, 2006
2,259
843
92
1,483
–
28
2,835
Workforce-related
provisions
390
51
28
236
–
5
552
Other provisions
307
80
71
285
–
2
443
2,956
974
191
2,004
–
35
3,830
Obligations from
sales operations
Overall
195
32
Trade payables
EUR million
Dec. 31, 2006
Dec. 31, 2005
1,741
1,636
501
503
13
11
2,255
2,150
Trade payables in respect of
third parties
affiliated companies
associates
The fair value of trade payables in respect of third parties amounts to EUR 1,737 (1,631)
million. In the case of liabilities to affiliated companies, the fair value corresponds to the
carrying amount.
The customary retention of title moreover applies for liabilities from deliveries of goods.
Notes to the cash flow statement
The cash and cash equivalents indicated in the cash flow statement comprise exclusively the
cash and cash equivalents as reported in the balance sheet.
The cash flow statement explains the streams of payments for both the 2006 financial
year and the previous year, categorised according to cash inflows and outflows from operating, investing and financing activities. Effects of changes to the group and to foreign exchange rates on cash flows are shown separately.
The item income tax payments substantially comprises payments made to Volkswagen
AG on the basis of the single-entity relationship for tax purposes in Germany, and payments
to foreign tax authorities.
The change in cash and cash equivalents as a result of changes to the group relates to
companies that are consolidated for the first time and were carried at cost in previous years.
The cash flow from investing activities includes additions to property, plant and equipment and long-term investments, as well as development expenditure recognised as an
intangible asset. The change in investment property, the cash inflows arising from asset
disposals and the change in securities effective as payment are likewise reported in the cash
flow from investing activities.
Financing activities include cash outflows from the transfer and distribution of profit, as
well as changes in other financial liabilities.
In 2006, the cash flow from operating activities includes payments for interest received
amounting to EUR 175 (89) million and for interest paid amounting to EUR 71 (65) million.
The Audi Group accrued dividends and profit transfers totalling EUR 37 (19) million in 2006.
196
Other particulars
1 Hedging policy and risk
management
1.1 Price and foreign exchange exposure
The Audi Group is exposed to price and exchange rate fluctuations in view of its international business activities. These risks are limited by concluding appropriate hedging transactions for matching amounts and maturities. The measures to hedge against foreign exchange exposure are coordinated regularly between AUDI AG and the group treasury of
Volkswagen AG in accordance with the Volkswagen organisational guideline.
Marketable derivative financial instruments (foreign exchange contracts, currency option
transactions and commodity futures) are used for this purpose. The hedging transactions
are performed centrally on behalf of Audi by Volkswagen AG on the basis of an agency
agreement. Contracts are concluded exclusively with top-grade national and international
banks whose creditworthiness is regularly examined by leading rating agencies. The results
from hedging contracts are credited or charged to the Audi Group each month on the basis
of the proportion of the Volkswagen Group’s overall hedging volume.
In accordance with the Volkswagen organisational guideline, AUDI AG moreover concludes hedging transactions of its own to a limited extent, where this helps to simplify current operations.
Currency hedging in 2006 related principally to the US dollar, the pound sterling and the
Japanese yen.
Nominal volume of derivative financial instruments
The nominal volumes of the hedging transactions shown represent the total of all buying
and selling prices on which the transactions are based:
EUR million
Nominal volumes
Market values
Dec. 31, 2006
Time to maturity up to 1 year
Dec. 31, 2005
Time to maturity up to 1 year
Dec. 31, 2006
Dec. 31, 2005
Foreign exchange contracts
6,667
4,569
5,493
3,448
205
– 128
Currency option transactions
3,186
3,158
2,902
2,836
235
34
635
191
–
–
14
–
Commodity futures
Currency swaps
Total portfolio
1
1
–
–
–
–
10,489
7,919
8,395
6,284
454
– 94
1.2 Market risk
A market risk exists if price changes on financial markets have a negative influence on the
value of financial instruments. The market values shown in the table have been calculated
on the basis of the market information available at the balance sheet date and represent the
redemption (cash-in) values of the derivative financial instruments. The redemption values
are calculated on the basis of quoted prices or standardised methods.
197
1.3 Raw material risk
Raw material risks are excluded or limited by the conclusion of commodity futures or longterm supply agreements. Hedging measures relate principally to the supply of the raw materials aluminium, copper, palladium, platinum and rhodium.
1.4 Interest rate risk
An interest rate risk, in other words potential fluctuations in the value of financial instruments as a result of changes to market rates, can occur above all in the case of medium and
long-term, fixed-interest receivables or liabilities.
Fixed-interest loans advanced totalled EUR 15 (17) million at December 31, 2006. In view
of the low volume of these financial instruments, no interest-rate hedging contracts were
taken out.
1.5 Liquidity risk
High net liquidity and credit facilities of Volkswagen AG assure the adequate liquidity of the
Audi Group at all times.
1.6 Credit risk
The credit risk from financial assets consists in the risk of default by a counterparty and
therefore does not exceed the positive fair values of these assets.
We work on the assumption that the actual risk from primary financial instruments is
covered by reductions for impairment or uncollectability.
The credit risk from derivative financial instruments does not exceed the balance of positive market values in the event of default by a counterparty of Volkswagen AG or the Audi
Group companies. The actual credit risk is negligible, as Volkswagen AG and AUDI AG only
conclude contracts with top-class business partners and trading limits are defined for each
business partner as a risk management measure.
2 Contingencies
Contingencies are unrecognised contingent liabilities, the amount of which corresponds to
the maximum possible claim at the balance sheet date.
The liabilities from guarantees amounted to EUR 8 (4) million.
3 Litigation settlements
Neither AUDI AG nor any of its group companies are involved in ongoing or prospective
legal or arbitration proceedings which could have a significant influence on their economic
position. Appropriate provisions have been created within each group company, or adequate insurance benefits are anticipated, for possible financial charges resulting from other
legal or arbitrational proceedings.
198
4 Other financial
obligations
EUR million
Dec. 31, 2006
Dec. 31, 2005
Due
Due
within 1 year
1-5 years
over 5 years
Overall
after 1 year
Overall
property, plant and equipment
803
392
–
1,195
273
822
intangible assets
209
55
–
264
117
292
26
31
4
61
29
52
–
–
–
–
–
36
1,038
478
4
1,520
419
1,202
Ordering commitments for
Obligations from
long-term rental and lease
agreements
agreed loans
5 Discontinued operations
6 Cost of materials
There are no plans to discontinue or cease operations as defined by IFRS 5.
EUR million
Raw materials and consumables used as well as purchased goods
Purchased services
7 Personnel costs
2006
2005
19,925
17,758
1,702
1,381
21,627
19,139
EUR million
2006
2005
Wages and salaries
2,804
2,578
636
558
Social insurance as well as expenses for employee benefits and
maintenance payments
of which in respect of retirement benefit plans
104
73
of which defined contribution pension plans
220
214
3,440
3,136
2006
2005
45,179
45,504
7,118
6,908
52,297
52,412
2,031
2,019
8 Total average employees
for the year
Domestic group companies
Foreign group companies
Overall
of which apprentices
199
9 Related party disclosures
Related parties as defined in IAS 24 are:
– the parent company Volkswagen AG and its subsidiaries outside the Audi Group;
– other parties (persons and companies) which could be affected by the reporting entity or
which could exert influence on the reporting entity, such as
! the members of the Board of Management and Supervisory Board of AUDI AG,
! the members of the Board of Management and Supervisory Board of Volkswagen AG,
! associates.
The volume of transactions with the parent company Volkswagen AG and other subsidiaries which do not belong to the Audi Group is indicated by the following summary:
EUR million
2006
2005
3,937
3,821
10,319
8,221
Volkswagen AG
4,930
4,674
Volkswagen AG subsidiaries not
belonging to the Audi Group
3,446
1,345
5,582
3,255
487
257
2,307
1,645
630
645
Sales and services supplied to
Volkswagen AG
Volkswagen AG subsidiaries not
belonging to the Audi Group
Purchases and services received from
Receivables from
Volkswagen AG
Volkswagen AG subsidiaries not
belonging to the Audi Group
Liabilities to
Volkswagen AG
Volkswagen AG subsidiaries not
belonging to the Audi Group
At December 31, 2006, loan asset sales to Volkswagen AG subsidiaries not belonging to the
Audi Group amounted to EUR 1,168 million.
The extent of business relations between fully consolidated companies of the Audi
Group, joint ventures and associates is indicated by the following tables:
EUR million
Dec. 31, 2006
Share in %
Dec. 31, 2005
Goods and services supplied
Dec. 31, 2006
Dec. 31, 2005
Goods and services received
FAW-Volkswagen Automotive Company Ltd.,
Changchun (China)
10.0
1,031
710
0
1
YANASE Audi Sales Company Ltd., Tokyo (Japan)
33.4
138
141
16
27
Audi Zentrum Stuttgart GmbH & Co. KG, Stuttgart*
51.0
–
47
–
8
200
EUR million
Dec. 31, 2006
Share in %
Dec. 31, 2005
Receivables from
Dec. 31, 2006
Dec. 31, 2005
Liabilities to
FAW-Volkswagen Automotive Company Ltd.,
Changchun (China)
10.0
118
116
26
45
YANASE Audi Sales Company Ltd., Tokyo (Japan)
33.4
32
47
4
5
Audi Zentrum Stuttgart GmbH & Co. KG, Stuttgart*
51.0
–
27
–
0
* The investment in Audi Zentrum Stuttgart GmbH & Co. KG was sold with effect from January 1, 2006.
All business with related parties has been conducted on the basis of international comparable uncontrolled price methods pursuant to IAS 24, according to the terms that customarily
apply to outside third parties. The goods and services procured from related parties include
primarily supplies for production, as well as development, transport, financial and distribution services and, to a lesser extent, design, training and other services and supplies of
original parts. Business to related parties comprises for the most part sales of new and used
cars, engines and components.
Members of the Boards of Management or Supervisory Boards of Volkswagen AG and
AUDI AG also belong to the supervisory or management boards of other companies with
which the Audi Group maintains business relations. All transactions with such companies
are likewise conducted according to the terms that customarily apply to outside third parties.
Cash management within the Audi Group is centralised at AUDI AG. The group companies invest their liquid funds with AUDI AG or raise liquid funds from it. Residual amounts
are equalised via the cash pool of Volkswagen AG. All transactions are handled on market
terms.
10 Auditor’s fees
EUR ‘000
Auditing of the financial statements
Other certification or valuation services
Tax consultancy services
Other services
2006
2005
565
594
–
130
12
8
116
–
693
732
201
Segment reporting
The Audi Group comprises primarily only the “Cars” segment.
The secondary segment reporting structure is based on the arrangement for internal
group steering and reporting. The Audi Group is structured into the segments Germany,
Rest of Europe and Rest of world on the basis of the regional locations of its assets.
Transactions between the segments are conducted on generally accepted market terms,
in the way that is customary for transactions with outside third parties.
EUR million
2006
2005
External revenue
Germany
2006
2005
Internal revenue
2006
2005
Total revenue
21,950
18,379
3,238
2,723
25,188
21,102
Rest of Europe
7,824
7,249
2,728
2,177
10,552
9,426
Rest of world
1,368
963
2
1
1,370
964
–
–
– 5,968
– 4,901
– 5,968
– 4,901
Audi Group
31,142
26,591
–
–
31,142
26,591
EUR million
2006
2005
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2006
Dec. 31, 2005
Consolidation measures
Profit before tax
Germany*
Segment assets*
Segment liabilities
1,542
993
16,110
13,546
12,029
9,948
Rest of Europe
462
388
5,166
4,662
1,386
1,296
Rest of world
– 56
– 65
674
623
639
529
–2
–6
– 3,675
– 3,123
– 2,427
– 1,831
1,946
1,310
18,275
15,708
11,627
9,942
Consolidation measures
Audi Group
* The German segment assets for 2005 include a sum of EUR 25 million for the “Assets and liabilities held for sale” of Audi Synko GmbH, bracketed together as a
disposal group.
EUR million
2006
2005
Investments in intangible
asset and property, plant
and equipment
Germany
Rest of Europe
2006
2005
Long-term investments
1,511
1,252
3
0
399
452
5
–
Rest of world
7
3
–
–
Consolidation measures
–
–
–
–
1,917
1,707
8
0
Audi Group
202
EUR million
2006
2005
Depreciation and amortisation
Germany
Rest of Europe
Rest of world
Revenue by region
2005
Other non-cash expenses
2,027
1,607
1,522
1,700
417
273
270
199
71
50
130
249
–
–
–6
– 397
2,515
1,930
1,916
1,751
Consolidation measures
Audi Group
2006
Share 2006
Share 2005
EUR million
%
EUR million
%
9,101
29.2
8,389
31.5
Rest of Europe
15,530
49.9
13,473
50.7
North America
3,067
9.9
2,370
8.9
Asia/Oceania
2,992
9.6
2,016
7.6
Africa
286
0.9
210
0.8
South America
166
0.5
133
0.5
31,142
100.0
26,591
100.0
Germany
Overall
German Corporate Governance Code
The Board of Management and Supervisory Board of AUDI AG submitted the declaration
pursuant to Section 161 of German Stock Corporation Law on the “German Corporate Governance Code” on December 6, 2006 and made it accessible on the website
www.audi.com/cgk-declaration.
Details of the Supervisory Board and Board of Management
The remuneration of members of the Board of Management complies with the legal requirements of German Stock Corporation Law as well as the recommendations and most of
the suggestions of the “German Corporate Governance Code”. The overall remuneration is
made up of fixed and variable components.
The fixed components assure a basic remuneration that enables the board member to
execute his duties conscientiously and in the best interests of the company, without becoming dependent upon the attainment of short-term targets. Conversely, variable components
that are dependent on the economic reality of the company reconcile the interests of the
Board of Management with those of the other stakeholders.
The remuneration of members of the Board of Management for the 2006 financial year
amounted to EUR 4,531 (4,496) thousand, of which variable components accounted for
EUR 2,479 (2,345) thousand. The fixed remuneration components for the members of the
Board of Management totalled EUR 2,052 (2,151) thousand in the 2006 financial year. The
disclosure of the remuneration of each individual member of the Board of Management, by
name, pursuant to Section 314 Paragraph 1 No. 6a) Sentences 5 to 9 of the German Commercial Code is not made, as the 2006 Annual General Meeting passed a corresponding
resolution that is valid for a period of five years.
As well as fixed payments in cash, there are varying levels of contributions in kind, including in particular the use of company cars.
203
Every member of the Board of Management is paid a variable annual gratuity. The variable gratuity comprises components recurring annually that are tied to the economic success of the company. It is largely based on the earnings achieved by the company and its
economic situation.
Share options serve as variable remuneration components providing a long-term incentive. These options are based on the performance of Volkswagen ordinary shares. In the
context of the eighth tranche of the share options plan, in the 2006 financial year each
member of the Board of Management was able to subscribe to up to 500 non-transferable
convertible bonds at a price of EUR 2.56 each, entitling the holder to up to 5,000 Volkswagen
ordinary shares. A condition of participation in this share options plan was the contribution
of between EUR 5,000 and EUR 25,000 in time bonds, depending on the number of convertible bonds being acquired.
The structure of the share options plan is essentially as follows: the basis for determining the conversion price (basic conversion price) of a tranche is the average Xetra closing
prices of Volkswagen ordinary shares on the five trading days preceding each decision to
issue convertible bonds. Conversion may take place for the first time after a qualifying period of 24 months and then up until a period of five years from the time of issue of the convertible bonds has elapsed. The conversion price is initially 110 percent of the basic conversion price, rising by five percentage points in each subsequent year. The Board of Management may exercise its conversion rights only three times a year, during four-week exercise
periods, each of which commences on a public reporting date of Volkswagen AG. The share
options plan is thus centred on demanding, relevant comparative parameters in the spirit of
the German Corporate Governance Code. Further details are given in the Agenda to the
Annual General Meeting of Volkswagen AG on April 16, 2002, at which authorisation to introduce the share options plan was granted.
The purpose of the share options plan’s structure is to grant the Board of Management a
remuneration component that is based on appreciation in the company’s share price. It is
thus intended to contribute towards increasing value creation and towards enhancing the
value of Volkswagen AG. The share options plan is in addition a widely used instrument for
recruiting and retaining board members.
The retrospective adjustment of the stock option plan’s performance targets or comparative parameters is excluded.
Inappropriate inflows from the share options are not to be expected due to the link with
the share price performance of Volkswagen ordinary shares and the restricted number of
options per tranche. In order to implement the recommendation of the German Corporate
Governance Code, the Supervisory Board is prepared to come to an agreement with the
members of the Board of Management on a cap in the event of exceptional, unforeseen
developments.
In the context of the eighth tranche of the share options plan, the members of the Board
of Management of AUDI AG subscribed to a total of 1,700 of the aforementioned convertible
bonds in the 2006 financial year. In the period under review, the number of share options
exercised by members of the Board of Management of AUDI AG totalled 3,400. At December 31, 2006 the members of the Board of Management held entitlements to purchase a
total of 37,000 ordinary shares of Volkswagen AG in the event of the conditions of conversion being met. The value of the share options from all tranches totalled EUR 713 thousand
at December 31, 2006. This calculation is based on a binominal model and takes all parameters of the share options plan into account.
In certain circumstances, members of the Board of Management are entitled to retirement benefits and a disability pension.
The defined benefit liabilities for pensions for current members of the Board of Management totalled EUR 7,454 (9,033) thousand at December 31, 2006.
204
Former members of the Board of Management and their surviving dependents received
payments totalling EUR 1,359 (5,344) thousand. The defined benefit liabilities for this group
of persons amount to EUR 22,175 (20,895) thousand.
The members of the Board of Management, together with their membership of other supervisory boards and regulatory bodies – pursuant to Sections 285 Sentence 1 No. 10 of the
German Commercial Code and 125 Para. 1 Sentence 3 of German Stock Corporation Law –
are indicated in the Notes to the financial statements of AUDI AG.
The basic features of the Supervisory Board´s remuneration are laid down in Section 16
of the articles of incorporation. The overall remuneration is made up of fixed and variable
components. The level of the variable remuneration components is based on the compensatory payment made for the 2006 financial year in accordance with the applicable provision in
the articles of incorporation. The remuneration of the Supervisory Board of AUDI AG totalled
EUR 459 (382) thousand, including EUR 172 (172) thousand in fixed remuneration components and EUR 287 (210) thousand in variable remuneration components.
Supervisory Board
1)
Position at December 31, 2006
2)
Dr.-Ing. e.h. Bernd Pischetsrieder
Chairman
Shareholders’ representative
Berthold Huber
Deputy Chairman
Employees’ representative
Dr. rer. pol. h.c. Bruno Adelt
Shareholders’ representative
Senator h.c. Helmut Aurenz
Shareholders’ representative
Joachim Dilger
Employees’ representative
6)
Heinz Eyer
Employees’ representative
6)
Dr. rer. pol. Thomas R. Fischer
Shareholders’ representative
Wolfgang Förster
Employees’ representative
Francisco Javier Garcia Sanz
Shareholders’ representative
Dr. jur. Claus Helbig
Shareholders’ representative
Johann Horn
Employees’ representative
6)
Peter Mosch
Employees’ representative
2), 4), 6)
Dr. rer. pol. Horst Neumann
Shareholders’ representative
Dr.-Ing. Franz-Josef Paefgen
Shareholders’ representative
Hans Dieter Pötsch
Shareholders’ representative
2), 6)
2)
6)
5)
3)
Richard Polzmacher
Employees’ representative
6)
Norbert Rank
Employees’ representative
5), 6)
Dr. rer. pol. Axel Freiherr von Ruedorffer
Shareholders’ representative
Jörg Schlagbauer
Employees’ representative
6)
Max Wäcker
Employees’ representative
6)
Dr. rer. pol. Carl H. Hahn
Honorary Chairman
1) The profession and company of the members of the Supervisory Board, together with other non-executive directorships, are indicated in the Notes to the financial statements of AUDI AG.
2) Member of the Presiding Committee and the Negotiating Committee.
3) Chairman of the Audit Committee.
4) Deputy Chairman of the Audit Committee.
5) Member of the Audit Committee.
6) The employees’ elected representatives have stated that their remuneration as Supervisory Board members be paid to
the Hans Böckler Foundation, in accordance with the guidelines of the German Confederation of Trade Unions.
205
Events occurring after the balance sheet date
No events which must be reported according to IAS 10 occurred after December 31, 2006.
Ingolstadt, February 13, 2007
The Board of Management
206
Statement of interests held by the Audi Group
at December 31, 2006
Principal group companies
Name and registered office
Capital share in %
AUDI AG, Ingolstadt
Audi Australia Pty Ltd., Botany (Australia)
100.00
Audi Brasil Distribuidora de Veículos, São Paulo (Brazil)
100.00
AUDI DO BRASIL E CIA., Curitiba (Brazil)
100.00
AUDI HUNGARIA MOTOR Kft., Győr (Hungary)
100.00
Audi Japan K.K., Tokyo (Japan)
100.00
Audi Vertriebsbetreuungsgesellschaft mbH, Ingolstadt
100.00
Audi Volkswagen Korea Ltd., Seoul (South Korea)
100.00
Audi Volkswagen Middle East FZE, Dubai (United Arab Emirates)
100.00
Automobili Lamborghini Holding S.p.A., Sant’Agata Bolognese (Italy)
100.00
AUTOGERMA S.p.A., Verona (Italy)
100.00
Automobili Lamborghini S.p.A., Sant’Agata Bolognese (Italy)
100.00
MML S.p.A., Sant’Agata Bolognese (Italy)*
100.00
Lamborghini ArtiMarca S.p.A., Sant’Agata Bolognese (Italy)
100.00
quattro GmbH, Neckarsulm
100.00
YANASE Audi Sales Company Ltd., Tokyo (Japan)
33.40
FAW-Volkswagen Automotive Company Ltd., Changchun (China)
10.00
* Formerly Motori Marini Lamborghini S.p.A.
207
Fuel consumption and emission figures
Power
output (kW)
Transmission
Fuel consumption
(l/100 km)
CO2 emissions
(g/km)
urban
extra urban
combined
combined
Audi A3 1.8 TFSI
118
M6
10.0
5.7
7.3
174
Audi S3
195
M6
12.4
7.2
9.1
217
Audi A6 Avant 2.7 TDI
132
10.2
5.9
7.5
199
Audi S6
320
A6
19.7
9.7
13.4
319
Audi Q7 3.0 TDI
171
A6
14.6
8.3
10.5
282
Audi S8
331
A6
19.7
9.7
13.4
319
Audi A8 W12 quattro
331
A6
21.4
10.8
14.7
353
Audi A8 L W12 quattro
331
A6
20.7
10.0
13.9
334
Audi R8
309
M6
22.1
10.2
14.6
349
Lamborghini Gallardo Coupé
382
M6
24.8
12.4
17.0
400
Lamborghini Murciélago
LP640 Coupé
471
M6
32.2
15.0
21.3
495
Ibiza Cupra 1.8 20V T
132
M5
11.0
6.2
8.0
192
multitronic*
* continuously variable
Key:
M: manual gearbox
A: automatic transmission
The transmission/gearbox type is followed by the number of gears/speeds (e.g. M6).
208
Audi Group Key Figures
Production
Vehicle sales
10-Year Overview
2006
2005
Change in %
Cars
926,180
811,522
14.1
Engines
1,895,695
1,695,045
11.8
Cars
1997
1998
1999
German Commercial Code
Production
2000
2001
2002
2003
2004
2005
2006
IFRS
Cars
557,777
619,030
626,059
650,850
727,033
735,913
761,582
784,972
811,522
926,180
Engines
763,928
1,241,351
1,266,896
1,187,666
1,225,448
1,284,488
1,342,883
1,485,536
1,695,045
1,895,695
1,135,554
1,135,554
1,045,114
8.7
905,188
829,109
9.2
Vehicle sales
Cars
546,436
599,509
634,973
919,621
991,444
995,531
1,003,791
971,832
1,045,114
Germany
257,792
247,125
4.3
Audi
Cars
546,436
599,509
634,708
653,404
726,134
742,128
769,893
779,441
829,109
905,188
Outside Germany
647,396
581,984
11.2
Germany
Cars
238,735
244,127
257,642
239,644
254,866
243,650
237,786
235,092
247,125
257,792
2,087
1,600
30.4
Outside Germany
Cars
307,701
355,382
377,066
413,760
471,268
498,478
532,107
544,349
581,984
647,396
228,279
214,405
6.5
Outside Germany
Percent
56.3
59.3
59.4
63.3
64.9
67.2
69.1
69.8
70.2
71.5
Market share, Germany
Percent
6.8
6.5
6.8
6.9
7.5
7.4
7.4
7.2
7.4
7.6
Lamborghini
Cars
–
–
265
296
297
424
1,305
1,592
1,600
2,087
Other Volkswagen Group brands
Cars
–
–
–
265,921
265,013
252,979
232,593
190,799
214,405
228,279
Audi
Lamborghini
Other Volkswagen Group brands
Employees
Average
52,297
52,412
– 0.2
Revenue
EUR million
31,142
26,591
17.1
Profit before tax
EUR million
1,946
1,310
48.5
Profit after tax
EUR million
1,343
824
63.0
Employees
Average
37,761
41,011
45,800
49,396
51,141
51,198
52,689
53,144
52,412
52,297
Revenue
EUR million
11,458
13,918
15,146
19,952
22,032
22,603
23,406
24,506
26,591
31,142
Cost of materials
EUR million
7,568
9,578
10,155
14,539
15,860
16,726
17,163
17,676
19,139
21,627
Personnel costs
EUR million
1,973
2,111
2,291
2,542
2,660
2,739
2,938
3,072
3,136 1
3,440
65,771
EUR
52,251
51,485
50,022
51,456
52,018
53,496
55,763
57,798
59,834 1
Depreciation and amortisation
EUR million
556
885
945
1,179
1,412
1,614
1,833
1,852
1,930
2,515
Profit before tax
EUR million
569
861
839
971
1,286
1,219
1,101
1,143
1,310
1,946
EUR million
188
237
324
725
747
752
811
871
824
1,343
Personnel costs per employee
Rate of return before tax
Capital investments
Percent
EUR million
Development expenditure
recognised as an intangible asset
Depreciation and amortisation
EUR million
6.2
4.9
1,925
1,708
12.7
Profit after tax
625
543
15.1
Share price (year-end price) 2
EUR
70.81
75.16
61.20
59.59
160.00
191.00
225.00
220.15
308.00
540.00
Compensatory payment
EUR
0.61
0.77
0.77
1.20
1.30
1.30
1.05
1.05
1.15
X3
Added value
EUR million
2,606
3,039
3,198
3,590
3,892
4,000
4,287
4,585
4,801
6,156
Capital investments
EUR million
1,006
1,620
1,516
2,378
2,084
2,342
2,047
2,056
1,708
1,925
Cash flow from
operating activities
EUR million
1,020
1,213
1,163
2,058
2,393
2,440
2,786
2,690
3,252
4,428
Non-current assets
EUR million
2,412
3,126
3,679
7,039
7,685
8,308
8,588
8,970
8,597
8,285
Current assets
EUR million
3,182
3,359
3,024
3,219
3,437
4,342
5,475
5,934
7,515
10,625
Equity
EUR million
1,109
1,231
1,441
3,749
4,222
4,761
5,487
5,828
6,104
7,265
Liabilities
EUR million
4,485
5,254
5,262
6,509
6,900
7,889
8,576
9,076
10,008
11,645
Balance sheet total
EUR million
5,594
6,485
6,703
10,258
11,122
12,650
14,063
14,904
16,112
18,910
2,515
1,930
30.3
Cash flow from operating
activities
EUR million
4,428
3,252
36.2
Balance sheet total at Dec. 31
EUR million
18,910
16,112
17.4
Percent
38.4
37.9
Equity ratio at Dec. 31
1
2
3
Figures adjusted for ease of comparison due to the reclassification of anticipated returns on plan assets pursuant to IAS 19.
Year-end price on Munich Stock Exchange.
In accordance with the resolution to be passed by the Annual General Meeting of Volkswagen AG on April 19, 2007.
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