Audi, the luxury car division of Volkswagen, Europe's largest car maker, has posted a 4.7% gain on revenue to reach €24.5 billion in 2004. Income for the period rose by 7.4% to reach €871 million. The results are indicative not only of the growing demand for luxury cars worldwide but also of the continued power of the Audi brand name.

Audi posted strong gains in both revenue and income for the 2004 period - surpassing the income of its parent company Volkswagen. Its performance also went some way to carrying Volkswagen through 2004, helping to balance out the losses incurred at the VW branded operation. The German-based company has indicated that income in 2005 is expected to stay stable, with the company set to increase its focus on the world's largest automotive market, the US, and the market with greatest global potential, China.

There is certainly some room left for improvement: Europe is a problem for Audi as it is for most auto manufacturers. Sales are falling in Germany, with little respite in sight, and western European demand remains stagnant overall. Nevertheless Audi's success is incontrovertible.

Regarding new models, 2005 will see the introduction of Audi's new 4x4 model, the Q7, which will compete with BMW's X5/X3 and the Mercedes M-Class, especially in the US where Audi expects to sell 55% of the new model. This will essentially complete the luxury model line-up for Audi, and will place it in a strong position to reach its target of over one million vehicle sales annually by 2008.

Furthermore, the company is developing formidable brand equity. Audi's A6 model recently collected the coveted "World Car of the Year" award, which will only enhance the marque's positioning and potential. While Audi remains resolutely and uncompromisingly a premium brand, it has also attained a highly sought after, and yet difficult to engineer, 'cool' status where other luxury brands - such as German rival Mercedes perhaps  - have struggled. Clever marketing and shrewd yet sparse product placement have helped, as has cutting edge vehicle design - typified by the iconic TT model.

Overall, the luxury car market is receiving greater attention from consumers who want to upgrade to better and more sophisticated models. With its strong brand name and reputation, there is little to suggest that Audi will not repeat its 2004 success again in the years ahead.

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