Audi surprised by demand rebound

An unexpected global economic recovery is pressuring Audi AG and other auto makers to boost production levels as consumer demand continues to intensify.

"We didn't see that the recovery would come so fast and so consistent around the world," Peter Schwarzenbauer, a member of Audi's board of management, said Wednesday on the sidelines of the Los Angeles Auto Show. "Usually we always have a regional recovery where some areas recover much faster than others. This year, the economy was extremely fast and extremely well around the world."

The auto maker has already announced plans to increase output at its Hungary and Spain plants.

Audi has also increased the allocation of vehicles it sends to America but still can't meet demand.

Auto makers and their parts makers are finding stronger financial footing although the level of automotive sales in the U.S. market remains relatively low. Sales in the U.S. are expected to be between 11.4 million and 11.6 million this year and 12 million to 12.5 million next year.

A tighter supply of vehicles means auto makers will continue to cut incentives.

Audi's overall incentives are already down 18% this year compared with last year, said Johan de Nysschen, head of Audi of America.

"This will be the fourth consecutive year-over-year that we have decreased incentives," Mr. Nysschen said. "We have this high demand so it makes no point to throw money at it."