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With new supercar, Audi chases down BMW

Germany's "other luxury car" wants to finally muscle its way into the top tier.

By Peter Valdes-Dapena, CNNMoney.com staff writer
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NEW YORK (CNNMoney.com) -- Audi introduced its new R8 sports car to the United States Wednesday with a drive down Manhattan's Park Avenue and New York mayor Michael Bloomberg riding shotgun.

It was a quick introduction, since the car was unveiled only two weeks ago in Paris. The car is slated to go on sale in the fall of 2007.

The R8, expected to be priced at about $100,000, is an example of just how upscale Audi wants to get. In terms of price and performance, it's no Lamborghini. Audi, a subsidiary of Volkswagen, already owns Lamborghini so they have that market covered.

The R8 does borrow some of its engineering, from the Lamborghini Gallardo, however. The R8 is an all-wheel-drive car powered by a 420-horsepower Audi V-8 mounted behind its two seats.

It's a "halo car," a product that's more about bolstering brand image than making big profits.

Its engine is designed to rev high - up to 8,250 rpm, Audi says - and offers a zero-to-sixty time of 4.6 seconds with a top speed of 185 miles per hour.

The R8 will be a direct competitor to cars like the Porsche 911 Carrera 4S, an all-wheel drive sports car powered by a 355-horsepower 6-cylinder engine. See correction.

What it won't compete with, directly, is any model from BMW or Mercedes-Benz, said Wolfgang Hoffman, director of product management for Audi USA. Those brands are Audi's real competitors, but Audi has targeted a hole in their line-ups.

Both BMW and Mercedes-Benz offer less exotic-looking performance models at near that price. But cars like the BMW M6 Coupe and Mercedes-Benz SL don't have the Lambo-like looks of the R8.

The race-inspired R8 serves as a reminder that Audi races cars and wins. It just doesn't compete in races that most Americans are familiar with. The name is taken directly from Audi's R8 race car, which was replaced on the LeMans-series endurance racing circuit this year by the diesel-powered R10.

But Audi wanted to price the car so that people could actually see them on the roads being driven by, preferably, the right sort of people, said Hoffman. That's as opposed to Mercedes SLR supercar, a machine seen in magazines and on Web sites but rarely, if ever, on the road.

Audi offers a number of performance-oriented cars, but the only car Audi currently offers with a sports-car body style is the TT. That car costs less than $50,000 for even upper-end models. In its upcoming redesign, the TT itself loses most of its current bubble shape, taking on more of the R8's aggressive sleekness.

The rest of the Audi line-up consists of sedans and the new Q7 crossover SUV. Coming soon will be the A5, a small coupe, and the Q5, a smaller SUV.

Moving the brand

Ticking off the three pillars of Audi's branding offensive Hoffman named "design," "product" and "who drives the car." Ultimately, Audi aims to move away from being seen as a "lesser BMW" to "something cooler than a BMW."

"Audi is looking to compete and be seen as a player that is, in every sense of the term, equal to Mercedes-Benz and BMW," said Matt Stone, an editor with Motor Trend magazine. "Audi is so close," he said.

What it needs now is some exposure, all the better if it's with well-known celebrities at the wheel. One plan is feature Audi cars in more "product placement" spots as the company did with the movie "I, Robot."

Audi now sells its cars for about four percent less than BMW and Mercedes, according to a Reuters report. The company plans to gradually raise prices as its brand image improves.

"We want to close the gap in five years," Johann de Nysschen, executive vice president in charge of Audi of America, told Reuters the New York event.

Still, not everyone sees Audi as that close to real stardom, just yet.

In spite of its technological prowess and improved quality, Audi is still a "Tier 2" luxury brand, said Joe Barker, an analyst with CSM Automotive, an auto market research firm.

"Tier 1" brands, those with real cachet, are BMW, Mercedes-Benz and Lexus. The inclusion of Lexus, a division of Toyota that didn't exist a few decades ago, shows that it is possible to break through.

Still, said Barker, Audi, seen by most Americans as Volkswagen's "Lexus," is down there with Acura, Infiniti and General Motors' Cadillac as a car that says you've almost arrived. But it's no BMW.

The R8 will help it break through that last stretch to the kind of image, Audi executives hope, the brand really deserves.

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Correction: An earlier version of this story misstated the expected price of the R8 and, therefore, miscast some of its competitors. Also, the Mercedes-Benz SLR McLaren was described as having a V-12 engine. That car has a supercharged V-8 engine. We regret the errors. (Back to story)

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