How Audi Is Cleaning Up with Clean Diesel

For luxury carmakers, the economic downturn has been particularly harsh. But Audi has withstood the downturn better than most — the automaker's sales are down 9.6% in the U.S. this year, compared with an overall slide of 26.7% for all luxury cars. Still, Johan de Nysschen, president of Audi's U.S. division, says the company can't afford to ride out the recession without making changes — it needs to continue to innovate. That is why Audi is pushing forward with clean-diesel technology, which de Nysschen believes is the quickest way to get fuel-efficient, less-polluting cars on the road. He spoke to TIME about Audi's recent economic performance, his feelings about electric vehicles and what kind of car he would most like to have in his garage. (See the history of the electric car.)

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Audi isn't doing too badly in the recession, but sales are down, right?
You cannot expect to escape the effects of the market. The luxury market is down by over 30%. I think if you compare our performance in that context, Audi is unquestionably the best performer in the luxury sector in the U.S. We're also selling more expensive cars and customers are buying better-equipped cars. This means on a revenue basis, we are virtually equal to last year, and I'm kind of grateful for that.

Before the recession, Audi's stated goal was to surpass BMW and Mercedes as the top-selling luxury brand. Is that still doable?
We said we wanted to be the most successful premium car company in the world. Many people interpret this as meaning we want to sell the most cars. To us, success is defined more broadly than that. Worldwide, we broke through the 1 million mark [in total sales] for the first time last year, which places us in a very strong No. 3 position globally [behind BMW and Mercedes]. But we want to be the most successful luxury brand on a basis of brand image, on a basis of reputation and ownership experience — if you get all of those things right, sales performance will follow. (See the 50 worst cars of all time.)

Many carmakers and governmental officials are focusing on electric cars and plug-in hybrids as the future of the industry. What's your take on that?
Hybrid technology has been around for how many years now? Yet its percentage of total vehicle sales is around 3%. It takes a very long time for these technologies to make inroads. We laud the Obama Administration's objective of wanting to get us to a point where we have lower emissions and lower fuel consumption. What we are less comfortable with is that they want to pick technology. Let the guys who actually understand these technologies get on with finding the solution.

In the long term, 20 years–plus, we all want to be at a place where we have, if not zero-emission vehicles, then to be as close to a zero-carbon footprint as possible. People would like to imagine that Utopia is around the corner, and that electrically powered cars are the instant solution. And I will tell you that there is no silver bullet. We have to embrace a whole range of alternative technologies. If we want to view electrically powered cars as one very viable means of getting to the Promised Land, then we have to face the reality that there are huge technological hurdles to overcome with regard to battery technology: cost, durability, charging and driving range.

Audi is instead touting the benefits of diesel technology. How do you get around the negative perception of diesel cars in the U.S.?
Clean-diesel technology represents an immediate technological leap — you immediately, very significantly, reduce fuel consumption and emissions. Biodiesel, too, could get you very close to the point where you can have a neutral carbon footprint. This can all be attained in a relatively shorter space of time, and at lower costs, than waiting 20 years–plus until we get our act together with electric cars. I should say, though, that hybrids are important. It is not diesel vs. hybrid — they are complementary technologies. We, too, will be producing hybrids — diesel ones.

Given the driving patterns of most American consumers, which is more likely to be suburban travel, clean diesel has advantages. Because this technology holds so much promise, it's our task to inform the public and policymakers because it's clear that public [opinion] will have to embrace all available technologies to move things forward. I also listen to all of our dealers, and it's very clear that those consumers who are informed about the technology have really embraced it with great enthusiasm. (See the best cars from the 2009 Detroit Auto Show.)

Audi just unveiled an electric sports car, the e-tron, which will be commercially available by 2012. So you're not totally against electric cars then?
That illustrates how I think electrically powered cars are going to develop. You're going to get two opposite poles, and both of them are going to be driven by the very high costs associated with battery technology. On the one hand, you're going to find small, very light commuter cars, with relatively spartan equipment. They will have lighter, smaller batteries with significantly shorter driving range — essentially good for urban commutes. On the other end of the spectrum — where the real technological advances are going to take place, and where the money will be spent — you're going to find the development of powerful electric cars with significant range. [These will be] emotionally styled luxury cars because you want some kind of intangible premium that customers are willing to pay for. These two poles will converge as the technology advances and costs are brought down to a point where the average family car could be available at a feasible price. That's the tipping point that, as I say, could take 20 years, easily. (Read "Audi Gets in the Fast Lane.")

Audi has also introduced the Spyder, a convertible version of its top-of-the-line R8 sports car. When will it be available in the U.S.?
The Spyder will be available at the end of next year. It's a very exciting car. I wish I had one in my garage.

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See the history of the electric car.