Quality is one of Audi’s most important values. When the company began building its $1.3 billion plant in Mexico in May of 2013, it made history by becoming the first European luxury automaker to open a production facility in the U.S. neighbor. Many people’s first thought was to be concerned with quality, Mexico being a very different place than Germany. Despite parent company Volkswagen’s stellar reputation for sound manufacturing in Mexico, some people remain skeptical.
To allay those concerns, Audi is committing to a stringent policy toward one group in particular: suppliers. To qualify for the North American Free Trade Agreement’s duty-free exemption, 65 percent of parts used must come from a NAFTA country. Audi has a goal of 90 percent. This means that the automaker must find reliable, detail-focused parts suppliers in North America, and a lot of them.
To do that, Audi is requiring suppliers to be completely transparent about how their supply chains work. Audi is essentially getting deep into the weeds, asking suppliers to share exactly how they procure materials, subassemblies, and from where. If Audi isn’t satisfied with a company’s practices, they bring company representatives to Germany for firsthand acquaintance with Audi’s standards.
Not only is Audi doing this for all of its Tier 1 suppliers, but Tier 2 and 3, as well. This is quite a divergence from the norm as most automakers inspect Tier 1 companies, but leaves further recesses of the supply chain up to subcontractors. One article pointed out how disinterest in supply chains came back to bite Japanese automakers in the wake of the earthquake and tsunami of 2011. If Audi is going to commit its future to bases outside of the homeland, it seems intent on making those outposts as vetted as possible.
The chief vehicle for the Mexico plant is the Q5. About 150,000 will be produced annually with a contingency to double that figure should the need arise. That constitutes a voracious need for solid suppliers, and we are pleased to see Audi taking a thorough approach to the successes of tomorrow.