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In the early 1990s, some Audi dealers had trouble selling one car a week.

The turnaround began in 1995 with the introduction of the A4 sedan, a zippy and stylish car that revived a nameplate some had given up for dead.

It took years of neglect, short-sightedness and what seems like a knot-headed effort to blur the distinction between the up-market Audi and the lower-priced Volkswagen to get into such a mess.

The company once offered the Audi Fox, the VW Fox and the Dasher. The cars shared many parts, had the same type of suspension and a similar engine. Such inept marketing was more than up to the task of killing sales.

VW designers may have seen the success US automakers had in offering economy and upgraded versions of a car built on the same frame. Think: Ford (F) and the fancier Mercury; Chrysler Corp.’s Plymouth Volare and the slightly spiffier Dodge Aspen. General Motors (GM) took a similar approach. The difference in production costs was minimal, but the upgraded versions delivered significantly higher profit margins. Such a deal - for the automakers.

But VW goofed in its effort to emulate the clever Yankees because there was no clear path for the buyer who aspired to the next level, whatever it was. Worse, Audi was pitched as a luxury car and not just a gussied up Volkswagen. The price differential backed up the claim, but the looks, guts and performance didn’t. As a result, increasing numbers of prospective buyers asked a basic question: why bother?

Then the bottom fell out. In 1986, a crusading TV show broadcast on a network not known for its accuracy charged that a major flaw in the Audi 5000 sedan caused the car to speed up instead of braking, thereby causing several fatal accidents. Ultimately, the automaker was vindicated, but the urban legend lived for years and morphed into Conventional Wisdom: the Audi was a dog with fleas that would bite you. Sales plunged.

Audi said the problem was caused by driver error - not a design flaw. While correct, Audi’s decision to blame its customers appears to have backfired and it took about 10 years for the company to climb out of that hole.

Volkswagen finally got it right with a typically Teutonic response: vorsprung durch technik. (That’s “advancement through technology” for those of you who remember little from your high school German class except the fraulein in the next row.) The company repositioned Audi as a premium brand within Volkswagen’s offerings and sharpened its image.

The Audi A4 showed that the company could clarify its model line, pitch youthful sportiness rather than stolid German engineering while boosting overall quality. In 1996, Audi’s US sales climbed about 50%, ending a 10-year decline.

Baby Boomers who had long since dropped their bohemian pretenses loved the new Audi. The price tag got fatter as the models got larger and spiffier - just the thing for a company selling what’s essentially a commodity bucket-of-bolts product.

Quality also improved. Edmunds has voted the Audi A4, now in its 3rd generation, a top pick for several years. “The 2008 Audi A4 is catnip for drivers who crave the finer things,” Edmunds says.

Audi sold 1,003,400 vehicles worldwide in 2008, making it the first time the brand cracked 7-digit sales. Audi sold 964,151 cars in 2007.

Car aficionados rave about Audi’s fresh look with 12 new or updated models in the last year or so.

But Audi’s thumping comeback may create a Catch-22: Can a brand that sells over 1 million cars a year maintain its aura of exclusivity? Leave that conundrum to the marketing staff. Right now, Audi’s sales sound like Eine Kleine Automusik.



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