Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The 2014 Audi RS7 Sportback Has Big Competition

The Audi RS7 Sportback offers 560 high-tech horsepower for $104,900. Photo credit: Audi

German luxury-car maker Audi has seen booming growth in recent years, growth that has made it the most profitable part of the giant Volkswagen Group (NASDAQOTH: VLKAY  ) . 

That growth has come as the brand has hit home run after home run, winning plaudits for styling, build quality, technology -- and high performance.

Not all Audi buyers want a high-performance car. But cars like the new RS7 Sportback are important to luxury brands for reasons that go far beyond the profits they generate. As Fool contributor John Rosevear explains in this video, "halo cars" like the RS7 are critical to many brands -- which is why Audi's new rocket ride has plenty of competition.

A transcript of the video is below.

Free report: The inside secrets to saving big on your next new car or truck
Think you got a great deal on your last new car or truck? Think again. Chances are good that you could have spent even less on that same vehicle. We all know that new-car dealers are a dangerous place for your wallet -- but do you really know all the tricks they use? The Motley Fool's top auto experts do, and they've decided to fight back. We've done a ton of research and created a brand-new report with all of the car-buying secrets you must know. We think the advice inside could save you thousands of dollars on your next new-vehicle purchase. Best of all, it's completely free -- click here now for instant access.

John Rosevear: Hey Fools, it's John Rosevear. So here it comes, the 2014 Audi RS7, it's the super high performance version of the A7, which is a low-slung four-door that Audi seems to want to call a coupe.

The RS7 has all wheel drive, of course, along with a twin-turbocharged 4.0 liter V8 that makes a whopping 560 horsepower. There's all sorts of high-tech wizardry going on too, advanced differentials that increase grip and acceleration out of turns, and even cylinder deactivation that helps that monster engine avoid gas-guzzler taxes and also keeps the RS7 quieter during highway driving.

So how much does all this cost? The RS7 starts at a mere $104,900 dollars, and Audi surely expects to sell only a tiny number of them, so it raises the question of why would any company in the super-competitive global auto business bother making the investments to make a product like this?

Well, there must be a good reason, because the RS7 has plenty of competition. There's BMW's  (NASDAQOTH: BAMXF  ) M5, which also has 560 horsepower from a twin-turbo V8 and starts at $92,900 dollars, the Mercedes-Benz E63 AMG 4Matic, which has 550 horsepower from its twin-turbo V8 and starts at $92,770 dollars, and the Cadillac CTS-V, which breaks the formula by having a supercharged V8 that's good for 556 horsepower and is a relative bargain at a mere $64,900, but that's an outgoing model, it'll be replaced soon with a version based on the all-new CTS, and it's a safe bet that the all-new version will be faster, more high-tech, and considerably more expensive.

And Nissan's  (NASDAQOTH: NSANY  ) Infiniti luxury brand just showed off what they call the Eau Rouge version of their Q50 sedan, it has 560 horsepower from a twin-turbo V6, and we don't know the price yet or even whether they're going to build it, but I think they will build it and I bet the price will be right in this neighborhood.

So why do these cars exist? They exist really for marketing purposes, brand building purposes. Having an extreme high performance car that gets on the cover of magazines and gets raves on the big car blogs reflects well on the rest of your product line, makes it seem more sporty and more desirable. And these cars get bought by people who tend to be fairly hardcore car enthusiasts, and when they rave about their car, it influences other people who may then be more drawn to the same brand.

The industry calls them "halo" cars, because they put a halo on the brand, make it seem more special, even if the total sales and profits from the model are tiny. It's a tiny market segment but the competition for top-dog status is pretty fierce, the RS7 looks really hot, the M5 has had terrific reviews, and I can't wait to see what Cadillac does with the next CTS-V, probably next year. Thanks for watching, and Fool on.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2876631, ~/Articles/ArticleHandler.aspx, 9/2/2015 8:59:40 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

John Rosevear

John Rosevear is the Fool's Senior Auto Specialist. John has been writing about the auto business and investing for over 20 years, and for The Motley Fool since 2007.

Today's Market

updated 11 hours ago Sponsored by:
DOW 16,058.35 -469.68 0.00%
S&P 500 1,913.85 -58.33 0.00%
NASD 4,636.11 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/1/2015 3:20 PM
BAMXF $89.56 Down -2.19 +0.00%
BMW CAPS Rating: ****
NSANY $17.25 Down -0.76 +0.00%
Nissan Motor CAPS Rating: ****
VLKAY $36.15 Down -1.09 +0.00%
Volkswagen AG (ADR… CAPS Rating: ****