In an effort to tap the salaried upper middle class market, Audi India is planning to roll out a leasing option by the end of this year.

The salaried class accounts for just about 5-10 per cent of the company’s total sales in the country. This could increase to 20-30 per cent in the next five years.

“This segment (salaried upper middle class) is witnessing a strong growth. Providing attractive finance schemes will make the purchases affordable and exciting for this segment and could lead to an exponential growth in the segment,” Michael Perschke, head of Audi India, said at the inauguration of the company’s first showroom in Bhubaneswar on Friday.

Under the leasing option, a consumer can buy an Audi on lease by servicing about half of its total cost for the first three years, after which he can either return the car or continue servicing the EMI (equated monthly instalments) to own the car.

Leasing is a big draw in developed countries such as the US, accounting for nearly 40 per cent of luxury car sales.

However, in India, Mercedes and BMW are the only luxury car manufacturers to offer the option.

Audi currently provides financing options in the form of service plan, extended warranty and insurance, among others, in India.

The company, however, has leasing options in some of its other markets.

According to Deep N. Mukherjee, Director, Corporate Ratings of India Ratings, such schemes might help create some incremental volumes initially.

But their profitability will depend on the payment servicing capability of consumers and the way the company manages the inventories, in case the cars come back after the three-year period.

Growth projections

Audi India expects to sell 10,800 units this fiscal. Its sales grew nearly 63 per cent to 9,350 units in 2012-13.

The eastern region accounts for about 10-12 per cent of its total sales at present.

The luxury car market in India grew by close to 26 per cent to 29,000 units in 2012.

Audi India will launch its A3 in the sedan category and a new range of Q7 in the SUV segment in calendar 2014. The company, which is selling close to 30,000 units in Japan at present, aims to achieve a similar figure for its Indian market by 2020.

“A good product pipeline, strong dealership network and marketing initiatives are our strengths,” said Perschke.

>shobha.roy@thehindu.co.in

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