Audi redesigned their V8 for more compact dimensions (mostly by moving the cam drive from a belt on the free-end to a chain on the flywheel-end) because the entire length of the engine hangs over the front axle in their drivetrain design. Every mm of length saved aids in overhang, weight distribution, polar moment and pedestrian collision safety of the car. Audi's V8 also long preceded the W8, dating back to the late 80s Audi V8 model. I owned a car with a variant of that engine while in Germany, a 1994 S4 Avant 4.2 V8.
The Hybrid version of the VW Touareg/Audi Q7/Porsche Cayenne will all use use the 3.6 VR6 and not the any 90-degree V6 variant from Audi.
Yes, there's intense competition and even some conflict within the VW Group, like any inter-division rivalry within a large conglomerate, but it's not like GM/Ford. But having just typed this, I must qualify that statement: I have personally worked in a project in a Tier-1 supplier where Ford and GM collaborated on a 6-speed transverse automatic transmission. In development they were known by GM and Ford as X22F and 6F, respectively. In production the X22F followed the more familiar convention and became the Hydra-Matic 6T70. It was a pretty good collaboration. I was in many a conference call with engineers and managers from both companies simultaneously.
