To Audi, India need not just remain a strategic market

Rahil Ansari was part of the core team that brought Audi to India 11 years ago. He was aged just 28 then.

Today, as Head of Audi India, Ansari pretty much represents the average age of his company’s customer. “Our average buyer is 40-years-old but the mindset and spirit is more important for us as a target group. Audi is seen as a young, dynamic and innovative brand,” he says.

These are traits that reflect India’s own age demographics, where two-thirds of the population is under 30 and raring to go. Literally, the sky is the limit for Audi except that things are not as simple as they seem.

Ansari sighs when asked why this is the case. Is it because India is predominantly a small car market and extremely price-sensitive? In this backdrop, how can a luxury brand like Audi become easily accessible?

Cess flip-flop

It is precisely this premise that irks Ansari and a lot of it has to do with the recent flip-flop on cess levels in the Goods and Services Tax regime introduced last year. What began as a more-than-welcome 15 per cent cess for luxury cars (in addition to the 28 per cent tax) was quickly hiked to 25 per cent.

Ansari briefly sees the funnier side of this five-week “honeymoon period” when luxury car-makers were ecstatic initially, only to be brought back to harsh reality soon. He believes the Centre should have waited longer before deciding to hike the cess. Audi, continues Ansari, could have possibly seen additional growth of up to 20 per cent if this had been untouched.

“Things would have moved properly and it would have been a win-win situation at least till the Budget this year,” he says. After all, reasons Ansari, this is serious business for Audi, which believes in the ‘Make in India’ vision statement.

“We are not running away since it is a growth market but then we also need the right tools to make it happen. It cannot always remain a strategic market since it is a country with top-class resources and a bright future,” he says.

Back home in Germany, headquarters was not amused either with this back-and-forth on the GST cess saga. “They were fuming because we were giving optimistic estimates initially and then ended up looking silly. They have apprehensions that everything in India can change overnight, which will affect long-term planning,” says Ansari.

Affecting future investment

As a result, it could become more difficult to convince them of further investments because one policy change can lead to “losing out on everything”. Ideally, the best bet is to have a sustainable policy, which will help car-makers like Audi plan long-term in product development.

“I would have brought in more new models, at least two, if the cess had not changed. If there was no business case, how could we stick our necks out?” he asks.

There is, of course, a school of thought that maintains that price hikes are inconsequential to luxury brands since it is only the wealthy who buy them anyway. Why should they worry about coughing up a few lakh rupees more?

Entry-level buyers

Ansari does not buy this argument saying that there are customers who aspire for entry-level brands like the Audi A3 or Q3. “Actually the perception of luxury cars being bought irrespective of price is wrong. First-time customers are buying into a luxury brand to experience it. It is a lot of money, which means more EMIs and taxing them more will not help the cause,” he counters.

In the process, luxury car sales are being restricted thanks to the cess. From Ansari’s point of view, if the company has invested in the country, product development, facility, etc, there needs to be reciprocity in terms of policy and access to luxury cars.

“In the future, we want to create a family environment for our customers. We want our first-time buyers to be family for life and upgrade to other brands within Audi,” says Ansari. An interesting transition is the growing number of women buyers, which means the brand is reaching out a lot more.

Like other developed markets, Audi is also seeing a shift in mobility trends in India. “We have a lot of mobility concepts globally and there will be something coming up in India. We will have the first pilot running by the year-end and it is an interesting concept that has been tried in other markets,” reveals Ansari.

COMMENT NOW