The History of the Four Rings--Part 4



The deal between VW and Daimler-Benz

At the end of 1958, Auto Union had 3,700 employees in Ingolstadt; twelve months later, the figure had soared to 5,700. The construction of the new plant not only meant that the workforce had grown dramatically. It was also the principal factor behind Auto Union's decision to transfer its production to Ingolstadt in 1961, followed by its administrative headquarters in 1962. The desired rationalization and cost-cutting effects materialized, but from 1962 Auto Union's production and sales figures both took a downturn, at a time when the parent company was experiencing a boom in both production and sales.

In 1964 in particular, Auto Union was confronted with acute financial difficulties. Daimler-Benz AG, increasingly going at arm's length to a subsidiary that was proving too difficult for comfort, for all its pedigree, decided that the best solution was what turned out to be a spectacular commercial transaction: the sale of Auto Union to Volkswagen. Issue 45 of the news magazine "Der Spiegel" wrote: "Daimler-Benz's prominent shareholder Friedrich Flick spent more than a year devising, rethinking and fine-honing the latest big scheme in his eventful career, "going on to comment that Flick had not only masterminded "the biggest business event of 1964," but had also been instrumental in laying down its finer details.

Ownership of Auto Union GmbH was transferred to VW AG in several stages, from 1964 on. Its new owner spent a total of DM 297 million on the transaction, and by 1966 had all the company's shares in its possession.

Good times, bad times...

The takeover by VW meant that Auto Union escaped going into receivership by a hair's breadth. The era of the two-stroke engine, formerly so popular, was coming to an end, and almost 30,000 unsold DKW cars were destined for the scrap heap. It was the VW Beetle which came to the rescue: between May 1965 and July 1969, almost 348,000 of the VW Beetle were assembled in Ingolstadt. From August 1965, the situation was also alleviated by the launch of the new "Audi". This car, the first one with a four-stroke engine to be built in Ingolstadt, aroused considerable market interest and established the basis of a successful model range. However, the recovery was only short-lived. After more than fifteen years of seemingly unstoppable economic recovery, in 1966/67 Germany suddenly went into a recession which hit Auto Union badly: production had to be cut back dramatically, and short-time was the inevitable consequence.

On March 10, 1969 Auto Union GmbH signed a merger agreement with NSU Motorenwerke AG (Neckarsulm). The establishment of the new company with the name Audi NSU Auto Union AG was backdated to January 1, 1969. This company, whose headquarters were in Neckarsulm, adopted a course of growth and expansion from the outset. Production of Audi and NSU cars rose steadily until 1973, when initial signs of the oil crisis emerged. In 1974, the weakening of the international economy had such an adverse effect on the market that the company had to scale down production to 330,000 vehicles, from almost 400,000 in the previous year. Such a radical measure inevitably cost a considerable number of jobs: in 1974, the total workforce fell from 33,800 to 28,600; in 1975, 1,700 jobs were lost at the Ingolstadt plant alone.

Entering a New Dimension

The car industry recovered at the end of 1975, a development that was reflected in the sales volume of Audi models. The last NSU Ro 80 left the assembly line in March 1977. This signalled the disappearance of the NSU brand, which dated back more than 100 years. Since that year, all cars built in Neckarsulm have borne the name "Audi".

Audi caused a sensation in 1980 with the launch of the Audi Quattro, the first volume production car with permanent four-wheel drive. Audi's rally sport activities served to underline the revolutionary nature and overwhelming superiority of its Quattro concept: in 1982, Audi became the first German brand to win the intensely fought-over Manufacturers World Championship, a feat which it repeated in 1984.

In 1982 Audi establish a record of another kind: with its drag coefficient of cD 0.30, the third-generation Audi 100 achieved the best aerodynamic performance of any volume-produced saloon in the world. Audi had come up with the right response to the challenges of the moment, at a time when there were increasing calls for environmental protection and economical use of fuel.

On January 1, 1985 Audi NSU Auto Union AG was renamed simply AUDI AG. The company's registered headquarters were simultaneously transferred from Neckarsulm to Ingolstadt. In the mid-1980s, Audi – along with other German car manufacturers – began to feel the impact of a high-profile public debate on stiffer speed limits and reduced exhaust emissions. Whereas domestic sales fell by 7.5 percent in 1985, exports rose by 9.4 percent.

In 1985, AUDI AG's capital investments totalled almost DM 1 billion, the highest figure in the history of the company. Product-related measures and new production technology were the investment priority. In autumn 1986, the new Audi 80 with fully galvanized body was launched. It came complete with a ten-year warranty against rust penetration, setting new standards in this class. 1988 saw the appearance of the V8, Audi's first deluxe-class car, with a 3.6 litre V8 engine and four-valve technology.

Audi's slogan "Vorsprung durch Technik" –meaning "Advancement through Technology", even though the German version may actually be more familiar in the English-speaking world – is also substantiated by the TDI engine concept. Its extremely low fuel consumption was documented impressively in several economy test runs: in 1992, a standard Audi 80 TDI drove all round the world, covering a distance of 40,273 km and clocking up an average consumption figure of 3.78 litres of fuel per 100 km (74.7 mpg) and an average speed of 85.8 km/h.

In the early 1990s, the market worldwide was generally weak, but the fall of the Berlin Wall and German monetary union generated an immense surge in demand on the domestic market. This sales boost on its home market helped Audi achieve record breaking sales revenues of DM 14.8 billion in 1991. However, by 1993 it was obvious that the special boom in Germany had only been able to allay the general downward trend for a couple of years.

Audi heralded in a new era in presenting the ASF (Audi Space Frame) aluminium study vehicle in autumn 1993 at the Tokyo Motor Show. The aluminium Audi celebrated its world début in March 1994, as the successor to the Audi V8. The new model designation A8 signalled a radical shift in Audi's model-naming policy. The Audi A6 followed in the summer, with the new A4 being launched in November 1994. This latter model rapidly brought further success to the company: in 1995, 120,000 of the Audi A4 were sold in Germany alone.

In autumn 1995, Audi produced its next trump in unveiling the sports car studies TT Coupé and TT Roadster: these concepts successfully blended distinctive automotive design based on nostalgic throwbacks with modern stylistic features and mature technology. One year on, Audi launched the A3, an attractive two-door compact model intended to draw new customer groups to the brand. In 1997, Audi presented the new Audi A6 and also the Al2 study vehicle, the latter an all-aluminium model based on second-generation ASF technology. The Audi TT Coupé and Audi TT Roadster production models were launched in 1998 and 1999.

Since 1994, the company's key business figures have benefited from an uninterrupted upward trend. Audi has become an international developer and manufacturer of high-quality cars. The company maintains production sites in Germany, Hungary, Brazil, China and South Africa. Audi sold over 650,000 vehicles in 2000. Sales totalled around DM 39 billion (including the Italian sales subsidiary Autogerma). The Audi Group has around 50,000 employees.

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(Article Contents Copyright Audi AG)