In a bid to make its cars more affordable, German auto major Audi plans to scale up manufacturing in the country. Currently, Audi manufactures only two of its models – the Audi A4 sedan and Audi A6 sedan – in India. According to Balbir Singh Dhillon, Head of Audi India, the carmaker plans to ramp this up to achieve local manufacturing of 80-85 per cent of the cars sold in India.
“Most of the cars that we will be selling in India will be made locally, otherwise, we end up paying very high duty,” Dhillon told BusinessLine.
The luxury automobile sector has seen stagnation in growth for almost a decade, accounting for just over 1 per cent of the overall market. Luxury car brands have blamed the stringent import duties as a cause of demand suppression.
“All our customers are well connected, very well travelled all across the world, they know what luxury is, the know the price of these cars outside of India. Therefore, it becomes extremely challenging for us to convince these customers to pay two times, 2.5 times the price that they would have gotten abroad. So, this is one of the biggest challenges we face. Even if we look at South-East Asia markets, the luxury segment revolves around 5-8 per cent,” said Dhillon.
However, with a young and burgeoning middle-class and upper-middle class that is aspirational and double-earning, Dhillon remains convinced that in the middle to long term the Indian market for luxury cars is likely to grow.
“A one per cent market share also indicates that India has a lot of growth potential, once these duties are lifted the volumes will grow exponentially as well. The immediate plans for Audi is not just to drive up volumes, but to keep investing in India, bringing new products to keep customers engaged. Audi believes in India’s story” said Dhillon.
Audi has been trying to make its products affordable with the launch of Audi Q2 last year for entry-level customers.
“This has been a successful experiment so far. There are many first-time buyers. The average age of the buyers is much younger than what it has been in the first-time luxury space. And we hope we can serve more and more segments and bring in more customers to us.”