The History of Audi

The development of a multi-brand group was not yet part of Volkswagen’s plans when it began negotiating to acquire Auto Union GmbH in 1964. It was interested in the Daimler-Benz subsidiary for different reasons: As car production at the Wolfsburg plant was nearing its capacity limits, Volkswagen was mainly looking to acquire the factory in Ingolstadt with its annual capacity of 100,000 vehicles, its highly skilled workforce, and its sales and service organisation including more than 1,200 dealers and workshops.

An added bonus was the fact that the takeover would eliminate a direct competitor. The acquisition package included the licence for the medium-pressure engine, which DaimlerBenz had developed almost to the point where it was ready for production with a view to converting the model range produced at Ingolstadt from two-stroke to four-stroke power. The 1.7-litre engine was seen as a technical innovation from which Volkswagen expected to gain a competitive edge. A study prepared for the Board of Management also stressed the option of positioning a vehicle based on the F 102 under the Audi brand name as a “European” alternative to the US models which predominated in the mid-range segment.

Facing stiffer competition as Ford and Opel penetrated the upper mid-range segment, Daimler-Benz decided to concentrate its financial resources on defending its market position. By disposing of Auto Union, which had recorded a significant loss in 1964, Daimler-Benz obtained some DM 310 million for further investments as well as avoiding future losses. The move was made all the easier in view of the fundamental differences of opinion concerning two-stroke engines between the Stuttgart parent company and its Ingolstadt-based subsidiary.

On January 1, 1965, Volkswagenwerk AG initially acquired a stake of 50.3 percent, giving it effective control over Auto Union, which then became a wholly owned subsidiary of Volkswagen in 1966. While the market split agreed between Volkswagen and Daimler Benz was in line with the strategic priorities of both concerns, wider co-operation plans ultimately failed as a result of their divergent interests.

At any rate, the new brand with the four rings as its symbol was to bring far-reaching changes to the profile of the emergent Volkswagen Group.

Black and white photo of a vintage motorcycle with a license plate in the foreground, while a man and a woman stand next to a tent on a grassy field, laughing as they set it up. — DKW MOTORCYCLE

Founded on September 3, 1949 in Ingolstadt, Auto Union GmbH was a young company built on a long history of automobile production stretching back to the 19th century. August Horch had established A. Horch & Cie. in Cologne on November 14, 1899. In 1904, the company was converted into a joint stock corporation and its headquarters were relocated to Zwickau. Following a dispute with the Supervisory Board, in 1909 the renowned designer August Horch left the business and founded a new company, August Horch Automobilwerke GmbH. Renamed Audi Automobilwerke GmbH in 1910, its Zwickau factory saw the first Audi roll off the production line in the same year. During the era of the Weimar Republic the small business grew into a brand with an international reputation. In the wake of the Great Depression, the two companies Horch and Audi faced severe financial problems, and united with two other car manufacturers in Saxony to form the Chemnitz-based Auto Union AG. The combined company’s four interlinking rings logo symbolised their union. On June 29, 1932, the DK W producer Zschopauer Motorenwerke J. S. Rasmussen AG, Horchwerke AG and Audi Werke AG all joined forces. The fourth brand was the automobile segment of Wanderer-Werke AG, which was integrated into Auto Union by a sale and lease contract. As the second-largest German automaker, Auto Union covered almost the entire market spectrum with a variety of model ranges in the 1930s. DK W was positioned in the lower mid-size segment, and in 1937 once again became the world’s largest motorcycle manufacturer with annual production of almost 60,000 units.

Endmontage im Werk Düsseldorf — FINAL ASSEMBLY AT THE DÜSSELDORF PLANT

Audi and Wanderer both served the upper mid-range segment of the market, also making motor racing history under the Auto Union name. Horch resumed its leading position in the luxury segment. The centralisation of research and development work in 1936/37 not only served to pool the innovation embodied in a large number of patents; its main aim was to cut costs by rationalising production. The heightened efforts to standardise body styles, chassis, engines and gearboxes created a characteristic Auto Union profile from the various model ranges which had co-existed up to that point. In the last year before the Second World War, Auto Union had a workforce of about 23,000 and produced more than 67,000 cars and 59,000 motorcycles. The company had already become a key supplier to the armed forces and government authorities and – like other automotive companies – was integrated into the National Socialist regime’s armaments industry and forced labour system once the war began.

INGOLSTADT PLANT

Die vier Marken der Auto Union — THE FOUR AUTO UNION BRANDS

Pionier mit Wankelmotor: Der RO 80 — PIONEER WITH A WANKEL ENGINE: THE RO 80

Up until 1965, it was the DK W brand, which had gained a high profile as a pioneer of front-wheel drive with the F1 introduced in 1931, that dictated the company’s engineering base and model range. Car production started at the new plant in Düsseldorf in 1950 with the F 89 P model, known as the “Meisterklasse” (Masterclass), while the motor-cycle range, which was continually expanded up until 1954, played a key role in the development of individual mobility in West Germany. The renaissance of the two-stroke engine in the post-war era boosted demand for the products of the Ingolstadt manufacturer. Auto Union was therefore an attractive prospect when Daimler-Benz acquired the company in April 1958 to make up the bottom end of its model portfolio. However, by the early 1960s it was becoming increasingly clear that Auto Union would not be able to attract new customer groups with its relatively expensive two-stroke models. Sales of the F 102, launched in spring 1964, lagged far behind expectations. Auto Union had become isolated on the market by persisting with its traditional engineering.

Präsentation des neuen Audi — PRESENTATION OF THE NEW AUDI

Following the capitulation of the German Reich, the Auto Union plants located in the Soviet occupation zone were dismantled and in 1948 the military government decreed that the company was to be expropriated. The seedbed for the new start in West Germany was a parts warehouse which had been relocated to Ingolstadt in 1945. The company, called “Zentraldepot für Auto Union Ersatzteile Ingolstadt GmbH”, which had been founded to manage the warehouse in December 1945 rapidly expanded. The first vans rolled off the production line in time for the Hanover Industrial Fair in the Spring of 1949, and on September 3, 1949 Auto Union GmbH was refounded by former senior executives of the predecessor Auto Union AG.

Under the umbrella of the Volkswagen Group, the new subsidiary successfully completed the difficult transition from two-stroke to four-stroke engines. From May 1965, the Beetle was also produced at Ingolstadt, closing the gap caused by the loss of two-stroke models. At the Frankfurt International Motor Show in September 1965, Auto Union presented its first four-stroke model. The new car, developed from the F 102 and powered by a medium-pressure engine, appeared under the Audi name and heralded the renaissance of the brand. In 1966, the model range was completed by the Audi Variant, Audi 60 and Audi Super 90. These new models ensured that Auto Union returned to profit following its losses the previous year, and also stabilised the shrinking sales network. However, it was only the Audi 100, launched in 1968 and successfully taking the company into the upper mid-size segment, that finally secured the position of Audi as an independent brand. The investment programme initiated in 1969 to expand production capacity and build up independent engineering capabilities at Ingolstadt underpinned the position attained by the company.

Garantiert rostfrei - vollverzinkte Karosserie des Audi 80 — GUARANTEED RUST-FREE – FULLY GALVANISED BODY OF THE AUDI 80

Anbruch des TDI-Zeitalters — START OF THE TDI ERA

Montage des TT in Györ — ASSEMBLY OF THE TT IN GYÖR

The Audi 200, launched in 1979, heralded the start of Audi’s long climb to success in the luxury segment. Audi established its technological edge embodied in the famous “Vorsprung durch Technik” slogan with four-wheel drive, which made its debut in the Audi quattro in 1980 and became available throughout the model range four years later. Four-wheel drive broke new ground in the international automotive industry, as well as in rallying, where Audi was able to build on its past successes. Audi celebrated its greatest triumphs in 1984, winning the world rally championship for manufacturers and taking the first three places in the Monte Carlo Rally. These victories boosted the image of the brand and underscored the company’s innovative power. In addition to its motorsport success, Audi’s business in general was on the up through the 1980s, and that trend was ref lected in high levels of capital investment. Investments reached a peak of almost a billion Deutschmarks in 1985, when the company was renamed Audi AG and its headquarters returned to Ingolstadt.

By 1999, Audi AG was a group with a workforce of 45,800, selling 626,000 cars and reporting profit for the year of DM 324 million. This success was the result of the cost benefits associated with increasingly lean production, networking with system suppliers and high levels of acceptance of the product range introduced in 1994. The Audi A4 in particular became a best-selling model and a driver of growth, while the A8 – the Audi f lagship with its aluminium body – symbolised the company’s pioneering role in light-weight design and strengthened its position in the luxury segment. The Volkswagen Group Board of Management acknowledged this development by instigating a clearer separation between the Volkswagen and Audi brands in 1995, after having already transferred sales responsibility for Audi vehicles to Ingolstadt with effect from January 1, 1993. Product marketing and the sales strategy were now exclusively tailored to the brand’s premium image.

The major increase in sales, which had surpassed the million units level for the first time in 2008 and by 2014 had climbed to 1,744 million, resulted primarily from the introduction of the Q5 and Q3 in the SU V segment and the A1, launched in 2010, which enabled Audi to conquer the premium compact segment. In addition, Audi consistently added to its product portfolio with new variants, refreshed its existing model series by launching new generations, and regularly upgraded the technical features of the individual models. The premium quality standards and design features are perfectly in line with customers’ tastes, further boosting the company’s success. Sales revenues rose from 34.2 billion euro in 2008 to a new record high of 53.7 billion euro in 2014, while operating profit improved from 3.7 to 5.1 billion euro.

Produktion in Changchun — PRODUCTION IN CHANGCHUN

With its global brand strategy, the premium manufacturer is well equipped to tap the growth potential of world markets in the future. Since the reintroduction of the Audi brand, the former two-stroke producer has become a respected technology leader in the international automotive industry. Highly profitable, a leading innovator and strongly positioned on all volume markets with top-class products, Audi enjoys an outstanding position within the Volkswagen brand alliance, and its significance for the future of the Volkswagen Group cannot be overstated.