TransportBT: As Audi goes direct-to-consumer, who benefits?
THE necessity for middlemen is continually questioned, especially in retail. Audi, however, is not just another fish in the sea; it’s a giant in the automotive industry and poised to take a daring leap. The auto industry has always been resistant to change, but the dawn of electric vehicles (EVs) has shaken things up. Tesla broke the traditional mould of car sales over a decade ago, going straight to the consumer and bypassing dealerships. Audi, a part of the Volkswagen Group, is catching up to this trend. With a market value of 50 billion euros, this change can significantly impact the established norms in the industry.
In this TransportBT episode, Derryn Wong speaks with Markus Schuster, managing director of Audi Singapore, and delves into Audi’s groundbreaking announcement - starting January 2025, Audi will sell cars directly to consumers in Singapore.
A bold new move
According to Schuster, the decision to start this new sales model in Singapore stems from the country’s unique market conditions. Singapore’s market is small yet innovative, making it a perfect testbed for new business concepts. Furthermore, the country’s digital readiness and consumer sophistication provide an ideal environment to gauge the effectiveness of this new model. It’s also notable that this is the first time Audi is implementing such a model anywhere in the world.
What’s unique about this new approach? Audi is offering an omni-channel presence where consumers can choose how they wish to purchase their cars. You can buy your Audi entirely online through a new digital platform, where you can configure your car, view available stock, select financing options, and even arrange for a trade in, all from the comfort of your home. Alternatively, for those who prefer human interaction, Audi will open the Audi House of Progress, a new showroom concept located centrally in Singapore. This experience centre will offer driving simulators and partner with Michelin-starred Burnt Ends for an elevated customer experience.
Role of the dealership redefined
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The traditional dealership model is not completely disappearing, though. While new car sales will be handled directly by Audi, their long-time partner, Premium Auto, will continue to manage after-sales services. As Schuster explains, the after-sales service is a critical part of the customer lifecycle.
Schuster points out that Audi is currently in the midst of a significant product rollout, particularly in its EV segment. Despite falling from 6th in sales in 2020 to 11th, Schuster is optimistic that these new initiatives will help Audi regain its foothold.
Innovation comes with risks
Switching to a new business model is not without its challenges and risks. There’s an increased cost and responsibility that comes with managing the entire sales process in-house.
As for pricing, Schuster makes it clear that this shift is not about slashing prices. The focus is on value for money, ensuring that customers get the best possible product for their investment. With the COE (Certificate of Entitlement) remaining a significant cost factor in Singapore, Audi aims to offer a high-value proposition rather than just cheaper cars.
Listen to the episode now to hear why Audi thinks this will elevate the customer experience.
For more episodes, go to bt.sg/podcasts and if you have feedback or an episode idea, please get in touch at btpodcasts@sph.com.sg.
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Written and hosted by: Derryn Wong (derrynwong@sph.com.sg)
With Markus Schuster, managing director, Audi Singapore
Edited by: Emily Liu & Claressa Monteiro
Produced by: Derryn Wong & Emily Liu
Engineered by: Chai Pei Chieh
A podcast by BT Podcasts, The Business Times, SPH Media
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