‘Luxury cars account for just over 1 per cent of total sales in country, but growth is robust’

How many models are you offering in India at the moment?

We have 22 models on offer, including a range of sedans, SUVs and sports cars. Some of the models are Q3,Q3 Sportsback, Q5, Q7,Q8, RSQ8, Q8 e-tron, Q8 Sportsback e-tron, A4, A6, S5, RS 5, e-tron, e-tron GT and RS e-tron GT.

How many models are being assembled here?

Mostly the high-volume cars. There are five models or variants that we are assembling in India such as Q3, Q3 Sportsback, A4, A6, Q5 and Q7. The rest of the vehicles are imported as completely built units (CBU).

Are you planning to assemble more models in the country?

It’s an ongoing process; whenever we foresee that a particular model will drive volumes or see a spurt in demand, we plan accordingly.

What is the extent of localisation in the models you are assembling in India?

Currently, we are importing most of the components. You need a certain threshold volume for localisation. However, efforts are on and we are working on the modalities to explore whatever localisation can be done in the future.

What are the sales numbers for this year?

Audi India sold 3,889 units in the first nine months of 2024. In the first six-seven months, we had supply constraints, so sales were impacted. The supply chain has improved compared to the first and second quarters. We will be able to better serve customers. Demand continues to be strong across our vast product portfolio. We remain optimistic about the upcoming festive season and are anticipating a gradual rebound in consumer sentiment, fuelled by the launch of new models and the growing demand for luxury experiences.

How do you see the market for the luxury segment in India?

The luxury segment is still small in India. If the industry sold 42 lakh passenger vehicles last year, the luxury segment was 48,500 vehicles, which is just over 1 per cent of the total market. As India’s GDP is on a robust path, we foresee a healthy growth and increased buying capacity.

What are the stumbling blocks?

If we see the luxury segment in China and South-East Asian markets such as Vietnam and Indonesia, the penetration is around 5-20 per cent compared to around 1.25 per cent here. There are a couple of reasons which are acting as a stumbling block in the adoption of the luxury segment. One of the major reasons is the per capita income. The per capita income of these countries is much higher than India’s. In China, it is around $8,000-$9,000. So, as the per capita income increases, the affluent segment also sees a rise, including the number of people who can afford to buy luxury items. Secondly, the definition of luxury varies in different countries. For example, luxury goods are considered sin goods in India. The GST in the automotive industry is one of the highest at 28 per cent. In addition, there is a cess of 22 per cent on the vehicles we sell. So, all put together, the GST varies between 48 and 50 per cent. Then, there is the registration cost on the ex-showroom price, which varies between 10 and 20 per cent. The cost of car ownership is relatively higher.

In other countries, the tax structure is relatively lower and reasonable.

A person replaces a car three to four times in his lifecycle. Every time he graduates to a bigger car. Initially, the jump is lower. However, later on, the jump becomes higher. The gap between non-luxury and luxury is huge. That’s why most of the people are not able to enter the luxury segment. Those who can’t afford new cars can opt for pre-owned cars. For us, it is growing at a faster pace. We have 29 new car showrooms, besides 27 pre-owned car showrooms.

What kind of industry growth are you anticipating in the current fiscal?

The luxury segment has been growing for the last three calendar years on the back of robust demand. We are anticipating good sales. However, the growth would be lower than last year. The industry grew by 27 per cent in 2023 and touched 48,500 units. Despite the growth tapering off on the back of record-breaking sales in 2023, we are confident that the industry will exceed 50,000 cars in 2024.

How important is the North India market?

North as a region is extremely significant for Audi India, both in terms of sales and brand visibility. Markets including Punjab (Chandigarh and Ludhiana), Haryana (Karnal and Gurugram), Jammu, Jaipur, Udaipur, Lucknow, and Delhi (West and South) have consistently shown a strong demand for luxury vehicles and the brand. We continue to do well in these markets.

North as a market has dynamic infrastructure that has witnessed an increased adoption of electric vehicles (EVs). As we continue to expand our electric and sustainable offerings, this region’s responsiveness to new technology makes it a key growth driver for us.

Punjab has been a key market for Audi India, with sales in the region consistently growing. With its preference for luxury and performance vehicles, the state makes a substantial contribution to the brand’s overall sales and growth in both new Audi and pre-owned cars.

The brand has seen a strong demand for everything from the the popular Audi Q3 to the flagship RS e-tron GT, the sports electric car. Post-pandemic, many younger professionals and new entrepreneurs are purchasing high-end vehicles. Today, 70 per cent of Audi India’s customers are under the age of 50. We are optimistic that sales will rise in the coming months.

You are celebrating the sale of one lakh cars in India.

Yes, in just over 15 years. To commemorate this milestone, the brand has a 100-day celebration benefit for Audi customers. One in every fourth car we sell in the country is to a repeat Audi customer — this tells us that our customers love our cars and are loyal to the brand.