Factors Affecting the Audi Car Company - Case Study Example

The paper "Factors Affecting the Audi Car Company" is a perfect example of a case study on marketing. Headquartered in Germany, the Audi AG, the automotive company was founded in 1910 (Baumann, 2010).  Audi production houses are based in India, China, Hungary, Germany, and Belgium. Major economic factors affecting Audi Company are fluctuations in currency and fuel price, high cost of raw materials, and economic recession (Baumann, 2010).  Besides the financial factors affecting Audi, the target market also severe the company’s profitability given that the company manufactures prestigious SUVs and automobiles. Since inception to date, the company has served the privileged and technophiles, and emphases on technology and novelty.

Like any other manufacturing company, Audi AG has no control over gas prices. First, rising fuel prices could be as a result of tightened global emission standards. Such standards require that models such as those manufactured by Audi to reduce their consumption of fossil fuels. Conversely, the manufacturer fails to understand the response by customers should the company decide to immediately switch to the production of fuel-efficient vehicles. Secondly, the rise in fuel prices affects Audi’s profitability since the cost of fuel involved in the manufacture of its vehicles may be too high in a market with low spending power (Baumann, 2010). The implication of high fuel prices is that it becomes hard to convince people to spend the little they have on luxurious assets like Audi cars because they want to save through investments in projects considered as having prolonged profitability. Conversely, lowering fuel prices improve Audi’s profitability given that the company can manufacture more vehicles in a market where the targeted consumers have higher spending capacity. In this case, potential customers have money to spend on other investments and own luxury vehicles (Baumann, 2010).

The global economic recession is also a factor affecting the Audi Company. Within any market, inflation results in high transport and food prices, like in the United Kingdom during the 2008 global recession. Such moments require prioritizing basic needs as well as saving. However, prolonged durations of inflation result in changes in consumer purchasing behaviour thereby, affecting Audi’s luxurious products (Baumann, 2010). For instance, the sale of Audi in 2009 dropped drastically given the market’s increasing recession and inflation. Other factors associated with recession include government measures in assisting people to live better. For instance, in 2009, the German government spent much in efforts to improve its citizens’ purchasing capacity while the United Kingdom government offered the benefits of extra money for exchanging a car with at least ten years lifetime for a current car from a dealer.  Such moves led to elevated Audi car sales within the European market between 2009 and 2010.

Besides inflation, recession and changes in fuel prices, Audi Company has to ensure that its vehicles have economically fit features to avoid jeopardizing the image of the cars it develops. This means that the company has to always match client personalities. Consequently, high manufacturing prices would result in less production to guarantee profitability and while at the same time maintaining the company’s brand image.

Finally, Audi’s profitability is affected by labour availability. Limited labour results in high salary and wages and this translates to lower profitability. Additionally, manufacturing Audi vehicles call for highly experienced and qualified personnel to deliver the company’s market needs. Consequently, the availability of such labour translates to high-quality products that customers are willing to spend their money on. Additionally, highly experienced employees improve Audi’s company’s innovative strategy thus expanding its potential customer base (Baumann, 2010).