Answer by Daniel Woodard, Marketing and Production for Techs and Startups.
- Shared parts with VW. Nissan and Porsche also did this to save themselves. Sharing parts makes everything easier. Parts, repairs, training, sales, costs, etc. The 2.0 liter turbo and the TDi engine are the mass engines. When they have trouble, like with the blown coil packs a few years ago, they affect a lot of cars but it's easy to diagnose and issue the recall. Do it correctly and fast enough and it does not hurt the brand more than the operational cost savings.
- Better design. VW and Audi both made a move to some of the best interiors in the business. When you sit in a VW or an Audi you are pleasantly surprised by the materials and design. Exteriors are well designed and understated. Leadership in Xenons and LEDs.
- Racing and the halo effect of the S, RS cars and the R8. BMW pioneered this with the ///M cars. Vipers and Corvettes pull halo duty for Dodge and GM. Audi gets good press from their LeMans involvement and ALMS sponsorships.
- Marketing. Great websites, minisites and TV commercials put a upscale polish on the brand. The Audi A4 was the perfect step-up car for the ad agency woman who came out of college with a Jetta. For the men, they positioned themselves as a sporty car with cachet that was not as mass as a BMW or Mercedes.
- For the gearheads, Quattro is the best in the business. Apologies to Subaru, but Quattro is top notch.
- Effort. Look at the 2000 A4 and Audi TT and you get the feeling that Audi (and all of VW) was trying hard and on plan. They went from the also-ran known for stuck gas pedals and blown coil packs to a brand that is right there as an alternative to BMW.
- For a world tired of BMW and those not finding appeal in the the entry level Mercedes, Audi moved in an filled the void. Lexus is probably closest to Audi, and probably more reliable, but if you lean euro, Audi was a nice find in the last 10 years or so.
tl;dr operational streamlining and commitment to design from interiors to exteriors to marketing materials.More questions on Audi: