'The luxury car market in India may grow at 7% this year.'

by Sumantra B Barooah 15 May 2015


Joe King, head of Audi India, speaks to Sumantra B Barooah on the sidelines of the launch of the facelifted RS7 Sportback on the India market, targeting east and north-east India, and why the company is in a happy position.

How do you see the market of cars priced at Rs 80 lakh or more panning out?
It is always been very consistent and grows consistently in line with the overall market. More products entering that segment also grow the market little bit. We sold 25 units of the previous RS 7 last year, which I think is not bad for car like this. That shows there's a thirst for people to drive a car like this.

How many cars do you expect to sell this year in India?
The luxury market is still growing quite slowly. May be it will grow 7 percent this year. But as more people are getting accustomed to luxury cars or having several luxury cars in their households, you can also say that the performance segment will also grow quite rapidly as well. That's why we have this and may be another product later this year.

You said Audi's plan is to have 10 offerings this year. Of that how many will be all new models?
Three to four of them will be totally new, including new body styles. We are pushing the boundaries at body styles as well and few models will get upgrades.

Products like the Q3S and A3 are aimed at getting first-time luxury car customers. What kind of contribution are they making to your overall volumes?
Certainly that market is growing rapidly at the moment. A lot of people have come to the Audi brand with the Q3 and A3. I think this is also a factor of the growing middle class, their first step into the luxury world. If you look at the economy, it may be the top is remaining quite stagnant but the entry level for the middle class and luxury middle class is where the market is growing.

The early adopters (for the A3, Q3S) are generally those who buy them as the second or third Audi car in the family. That was the case certainly at launch but now it has very much swung as a big percentage. First-time buyers will be well upward of 50 percent of their sales. More salaried employees are coming to showrooms, which we didn't see in the luxury car business earlier.

Will the Q1, which is in the works, also help?
That could be an interesting product for us.

The market is getting quite interesting. Audi maintains the lead in the annual figures, while your immediate competitor led the first quarter. How you see that competition shaping up in the coming years?
Honestly, we have maintained our lead in the financial year. I thought last year we had only one car launch which is the A3 sedan, the competition had 15 new model launches. There is always an aspect of model life cycle. Now it's our turn. We have got a lot of new products this year and are very comfortable and confident, the year's panning out already and we are convinced that we will be number one at the end.

Isn't the aggression in the market in the form of discounts also hitting the bottom line of carmakers?
I think we have got that absolutely 100 percent right. Over the past couple of years, we have been building our foundation, getting right dealer partners and the right investor strategy. We have allowed our investors to grow, so they have more outlets. In Gujarat, for example, we are about to enter a fourth location with one investor. We have invested a lot of money in training, the dealer network and are absolutely perfectly positioned for the next stage.

I think everybody has their own strategy and we believe in providing the right fair offerings in the marketplace, considering the model lifecycle and the likes. From our point of view, we are happy with what’s going on.

You have recently open new showrooms in the eastern and north eastern parts of the country? How you see these markets emerging?
We are always been very clear that we will make our decisions on our way, It's up to competition what they want – we just don’t go anywhere just because competition is there.

We always see what the car parc is. We balance the right investment to the dealer partner to make business sense and there's an element of going to where the customer is. If you go where the customer is from the service point of view, then sales will follow and that’s why Guwahati is also on board. There's already 150-200 Audis in that region. There's a real need from the service point of view to be there and we also see good long-term potential. So, I say, it's a marathon and not a sprint. It's not about just throwing dealers there and get some extra sales.