QUASHING rumours about direct retail and new dealers, Audi says it will soon unveil plans for a $50 million flagship showroom in the Leng Kee area likely to be operated by its current representative Premium Automobiles.

The showroom in the traditional motor belt is expected to be completed by end-2009 at the earliest and Audi is still in negotiations with Premium Automobiles on details of the dealer contract.

Meanwhile, the Ingolstadt, Germany-based premium carmaker will assume National Sales Company operations from Oct 1, 2007. This means Audi will import its own cars into Singapore. Previously, Premium Automobiles performed the function of importer here. Audi is the third member of the Volkswagen Group here to take over the importership role. Volkswagen and Bentley recently did the same.

'We are negotiating with our existing partner and we are very optimistic about agreeing on an investment plan including the new showroom,' says Reinhold Carl, managing director of Audi Asia Pacific. In typically understated German fashion, he adds: 'If we find agreement with him, we will be successful.'

When Mr Carl arrived in January this year, he decided the brand had to be represented in a different way in Singapore.

The good-natured head of Audi's regional office recalls: 'When I first arrived, I was surprised by the situation here. I didn't see many Audis on the street. We are No 1 in China and in many European markets. We are the top seller in the UK and growing fast in the US. I saw Audi cars everywhere. Here, I saw only two - one of them I was sitting in.'

After analysing the situation by conducting wide-ranging studies and consulting Audi's partners and customers, Mr Carl considered the many strategic options before him. He also considered the major dealer investments by his competitors, such as Mercedes-Benz's spanking new MB Centre on Alexandra Road, BMW's new facility next door due to open in 2008, and Volkswagen's extensive renovations earlier this year.

'We are a bit late because property prices and building costs have risen, but we have to improve,' he admits. 'But we are a bit conservative regarding changes and we feel we should give our existing partner the first choice to develop the business.'

Before that happened, though, Mr Carl says he was stunned by the number of suitors vying for the Audi franchise. The wooing was sparked by October 2006's decision to terminate the importer's contract with Premium Automobiles, although the dealer's contract remained unchanged.

'It is amazing how many parties are interested in the Audi brand but that is a positive sign,' he says.

Audi is the world's fastest growing premium brand and its goal is to sell 1.5 million cars worldwide by 2015. In line with this global goal, Mr Carl says the target for Singapore is to hit sales of 2,000 cars a year by then. In the first half of this year, 460 units were registered here.

Considering that Audi's rivals are currently selling in the region of about 3,500 cars annually, the $40 million to $50 million price tag for the new Audi showroom will be high.

'Yes, it is a high investment in relation to the number of cars we are selling. But it is only high because of rising costs, not because of its size. We will develop our dealership in line with our volume.'

It has been reported that Premium Automobiles will add a second storey to its existing showroom at 9 Leng Kee Road, and that it recently bought the former Wywy building down the road. But both sites are still deemed too small for the 'terminal architecture' corporate identity of Audi showrooms around the world. Mr Carl says negotiations with Premium Automobiles are ongoing but he is confident that they will be concluded by Oct 1.

And although it will take at least 18 to 24 months to build the showroom, Mr Carl says that does not mean Audi will twiddle its thumbs until then. 'There will be short-term improvements.'