Audi: Interview with Johan de Nysschen

AudiWorld was lucky enough to catch an exclusive interview with Johan de Nysschen, Audi of America's Executive Vice President. Here are some highlights.

AW: We are interested in more of the story regarding the tie-in between the racing and your business. We love motorsports; we are all fans. It is exhilarating. But you’re not just doing it because it is fun to come to Sebring and watch the cars…

JdN: Are you sure?

AW: Well that would be a scoop if that were true...

JdN: Boys never grow up; our toys just become more expensive!

AW: What are the biggest challenges for Audi of America specifically in introducing diesel technology?

JdN: It is to overcome the general consumer perceptions of diesel. American consumers according to all the research view diesel engine vehicles as slow, heavy, cumbersome, noisy, smoky…and smelly even. When you go to refuel you go around to the truck stops and you have oil on the walkway and when you fill up your tank with the diesel nozzle that fuels at thousands of liters per second… and you get fuel all over yourself. So, negative perception.

And I have to say this – some years ago some of the domestic brands ventured into the domain of diesel engine cars and their reliability reputation was not what we would consider to be benchmark. So it’s given diesel engine vehicles a bit of a bad rap. All of those are perceptions that have to be overcome.

The reality is of course something totally different. The modern, high tech diesel engine is quiet, it is clean burning, it is very economical; it has very beautiful power and torque characteristics. They are performance cars in their own right. But you have to get people to drive them and experience them to believe it. And of course that’s a long and slow process to change perceptions and attitudes. We also will have to overcome with certainty the distribution challenges for diesel fuel. And yes we are working very closely with our development partner Shell who is an important partner to us in this project. We want to work together with them to look at overcoming some of the challenges in introducing diesel to the US. Where are the pumps located? The dispensing nozzles? We have to somehow create an environment where the customer doesn’t feel like diesel is somehow a truck application and not a private transportation application.

JdN: Look, we can talk openly about the issue. Obviously we are looking at the potential of diesel fuel and I would be quite willing to share with you the kind of thought process that we follow.

AW: Please.

JdN: The first thing we have to consider is that the United States has got specific emissions requirements that are different that those we find in Europe today. So it means that we cannot just take the diesel engines that we have today in Europe, bring them here and sell the cars and watch the customers line up to buy them. We actually have to develop new engines to meet the US emissions requirements. Now when you talk about developing new engines you talk about very, very substantial development costs and then it becomes a clear business case. How much does it cost to develop an engine, how many engines do you need and what is the available volume and what is the pricing you can charge for it?

Now if you look at the pricing question first because that somehow determines the volume question – diesel engines cost significantly more to make than gasoline engines. It’s a fact – that’s how it is. Do we think that the American consumer today is willing to pay the price premium as you find in Europe? The answer is “no”. Why? Because in Europe there is a difference in the prices of diesel fuel and gasoline. In the US it’s not the same. The second thing we have to consider is the perception of the US consumer which I articulated earlier. So if people think diesel is slow, heavy, smoky and all of that stuff – and on top of that more expensive – why on earth would they take the first step to buy the car?

However, if I was in the service of the American government and I was charged with looking after the energy requirements of my country, I would be very concerned about the vulnerability we face at the moment about our energy needs. And I would be very interested in finding a way to offset this. Now let me tell you this: if 25% of the cars just roughly speaking that are purchased per year in the US were diesel powered – just by virtue of the fuel consumption benefits derived from diesel – we would save enough fuel to eliminate our oil imports from the whole of Saudi Arabia! Roughly speaking… Now you add into that equation the fact that you can use bio-diesel technology and have you oil produced by American farmers, it could further reduce your reliance on imported energy. So I’d be very interested in promoting this technology. And in the same way there have been steps taken to advance the use of hybrid cars – to get the penetration up – by the use of tax incentives, I would imagine that the first step to overcoming this resistance to exploring the new technology would be by providing some tax concessions. Eliminate the cost differential so you can get people in the car, get people going and let people experience the benefits of diesel technology. If that were to happen then already the business case for diesel becomes a lot more compelling.

Then we would have to look at how many different motors we would need. And I would have to say that from an Audi point of view we are looking at doing one engine only, at maximum two. Ideally you would like to have a whole lineup – 8-cylinders, 6-cylinders and 4-cylinders – and put them into every car you make. You can only do that when you’ve reached critical mass in terms of the general market acceptance of diesel. We are not about to pioneer the development of the diesel market of the whole United States; we are small company. We also don’t want to sit on the sidelines and watch the market develop and then wonder what happened. We want to take some risks, and we are right now putting together proposals for our colleagues in Ingolstadt for the development of some diesel engines for this market. We are evaluating the volume potential and the business feasibility and we hope to come back in due course with some news.

Related news: GermanCarBlog, P4MR, Audi

Source: AudiWorld

Audi: Interview with Johan de Nysschen

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