The Hindu Business Line : ‘We may bring the new Audi A4 by year-end’

It is a major day in Ingolstadt (about 80 km from Munich), the headquarters of the German premium luxury car manufacturer Audi. And, the company is organising a press conference at its corporate office to announce its annual results for 2007. More than a 100 journalists — from Germany and from across the globe — have gathered at the corporate office. Audi has sponsored the visit of journalists from South America, China, India, North America and South-East Asia for this annual event, held this time on March 11.

The previous evening, it was a gala event when the company inaugurated an exhibition of vehicles at its museum, the theme of this year’s event being “Power and Splendour - Carriages for State Occasions.” A heavily armoured Zil 111G used by Nikita Khrushchev shares space with a Lincoln Continental, believed to have been used by the charismatic John F. Kennedy.

Registration for the press conference begins at least an hour before the scheduled start. The weather outside is bright and sunny. A range of Audi cars and a couple of Lamborghinis are parked in the open space, a great opportunity to shoot pictures.

After the press conference, which lasts for over 90 minutes, Mr Rupert Stadler, Chairman of the Board of Management of Audi AG, poses for pictures and provides interviews to television channels. His day is packed. He will be meeting senior automobile and financial journalists from Germany and other countries. In this tight schedule, Audi India officials have managed a 20-minute interaction for the team of five Indian journalists.

The 45-year-old Mr Stadler, a Business Management graduate, greets the journalists warmly and provides an overview of India’s luxury car market and Audi’s plans. Excerpts:

On the Indian luxury car market

We started coming actively to India last year. I was personally in India, in Bangalore, for a test drive and to get a feeling about the infrastructure, the driving habits of the Indian people. We made a tour to Chennai. I got a good feeling about the possible expectations of the Indian market in the premium segment.

We know that the premium segment in India is still a small one. BMW has decided to go to Chennai. We have started with a small factory in Aurangabad, and assemble the Audi A6. We will probably bring the new Audi A4 to India by the end of the year. We are introducing the Audi A8, as an export model from Europe to India. We are working on the Q7, an SUV, which could be perfect for the Indian needs.

India is a diesel market. We think that we are very well on the way.

We believe that there will be a growth story in India. This will need time. Nevertheless we have decided to ramp up our network.

Our plans are to ramp up the network to 10 dealers.

Audi’s overall plans and perception of the Indian customer:

The Indian premium market will be for the next five-10 years a small one. Today we are talking about 3,000-4,000 cars. Tomorrow it could be 10,000, may be 20,000 for real premium cars such as Mercedes, BMW or Audi.

What has to be developed is the infrastructure. When I compare that with other Asian markets, the main difference is that their infrastructure is better developed.

The Indian customer needs a klaxon (horn). In terms of quality we need to make sure that our klaxon is always working in pretty good condition.

This is a real difference from Europe. I think in premium segment, there is really no big difference. People want to have a level of comfort, they want to have quality, high quality in materials and consumer electronics is a must. The connectivity of iPods, MP3 players or whatever. The rear seat entertainment — audio-stereo entertainment, music quality, video quality — has to be good. A lot of people have drivers and in the back seat they want to have a real luxury feel.

Growth in India is a step-by-step process.

First of all, I would like to break through the 1,000 barrier (cars a year). This is a small volume. The next one would be 5,000 units. Our strategic plans are to achieve 10,000 units a year, let us say by 2015.

On Audi in China in comparison with India:

We started in China in 1982. The Indian market was not prepared. This is the same for our competitors.

I personally got that feeling, in India, there are a lot of young people, they all have dreams. Dreams in terms of mobility. The first mobility is a bike, the second one is a motor bike, the third one may be a Tata and the next one could be a premium car. I visited Infosys in Bangalore. I had a perfect impression about young people, ambitious people, performance-oriented people. We know that their dreams are to have at least a sporty premium car. We will have that offer in future. But this will take time, may be 10 years.

Full-scale production in India depends on volume growth.

In China also we started with CKD. Today we have production facilities. For regular production, you need really much higher volumes.

On potential for outsourcing of components from India:

This is difficult to say, because we know that companies like Bosch, General Electric are working in India. I visited their facilities. They are working on injection systems with 1,600 bars pressure. We are working here in Europe with 1,800 bars. There is a technological difference.

But it is for sure, we are looking for local sourcing. This will take time because you have to maintain your quality.

You have to prove them quality wise, then you can start changing. These are things which really need time.

There is a lot of cooperation between Europe and India in the IT area.