Audi looks to revive its India growth story with 'Strategy 2025'

by Shahkar Abidi 25 Oct 2019

Audi India recently launched the 2019 A6 - the eighth generation of the luxury sedan.

German luxury carmaker Audi India has revealed that it is actively working on a new growth plan called 'Strategy 2025', which is designed to arrest the fall in its sales and bring in a new wave of buyers. The new growth strategy is based on five pillars of progress: innovation, profitability, sustainability, new product launches and digitalisation.

The marked increase in sales enquiries during the ongoing festive season has brought a glimmer of hope for the German luxury carmaker, which is attempting to revive its numbers in the Indian market. However, the company remains ‘cautiously optimistic’ even as it expects the situation to stabilise in the next couple of months.

According to Balbir Singh Dhillon, Audi India chief, the entire automotive industry has been facing challenges since the past three quarters. “But last month and this month have been relatively better as a number of enquiries from customers are definitely growing,” said Dhillon on the sidelines of company’s latest product launch, A6, in Mumbai on October 24.

“Have we come out of that tough time? I would say no, as of now. But there is a positive trend now and I am sure within a couple of months' time things will become stable,” added Dhillon, who took over the Audi India chief's role in July this year from his predecessor Rahil Ansari.

However, according to analysts and industry insiders, Dhillon’s task is not likely to be easy. As per industry reports, Audi India’s sales are around 5,000 units in the 2019 year-to-date, amongst its lowest in recent years, and staring at about 25 percent de-growth. To be sure, with painpoints of demonetisation and initial hiccups around GST gone, Audi  India was eyeing double-digit growth last year.

In 2018, Audi India sold a total of 6,463 units, down 18 percent (2017: 7,876 units / 2%). The company, which lost the No. 2 spot to BMW India in 2016, has been looking to revive its fortunes in the luxury car market in India where the penetration is hardly 1.2 percent of total car sales in the country, as compared to 5-7 percent in developed markets.

It is understood Audi India's performance in 2018 was considerably impacted by the not-so-good performance of its Delhi-NCR retail stores. A similar case mushroomed in Kolkata, company insiders revealed.“Some dealers do business very cleanly but one also faces such problems at times. In such circumstances, the most important thing is to take care of customers. So, the very first thing we did was to set up workshops with new partners as early as possible,” Dhillon pointed out, emphasising that efforts were made so that the existing customers were not impacted. “The cars were picked up from customers’ homes, serviced and dropped back home,” added Dhillon.

The slowdown in the overall automotive sector in the country has also impacted the luxury car segment, which is staring at a double-digit decline in 2019. 

Future challenges
The company management, it seems, is keeping its fingers crossed with regard to changes in the next few quarters. One major development expected to impact the industry will be the transition to BS VI emission norms from April 2020 which may increase the cost of ownership for the end customer. “Our own feeling is that we are optimistic but we are cautiously optimistic. When we are switching to new technology, the cost will also go up," said Dhillon.

‘Strategy 2025’ to drive new growth
In an effort to revive its fortunes in the Indian market and rev up sales, Audi India has come out with the 'Strategy 2025' plan. This strategic growth plan's pillars are innovation, profitability, sustainability, new product launches and digitalisation. Commenting on the changing sales trends, company executives say that till 2013, the Delhi-NCR region contributed around 30 percent of sales while Mumbai provided another 20 percent, with the rest coming from different parts of the country. However, now the contribution of Delhi- NCR and Mumbai have come down to under 30-35 percent.

Also read: Mercedes-Benz India sells 9,915 units in first 9 months of 2019, down 16%