A failing knock sensor in an Audi can cause several issues, including a thumping sound from the engine as ignition timing deviates, the check engine light illuminating, power output declining, and higher fuel consumption. The knock sensor monitors engine vibrations and helps regulate ignition timing, but a faulty sensor cannot detect issues that worsen over time if left unaddressed. Car owners should never ignore warning signs from the knock sensor and should identify and repair any problems as soon as possible.