Audi Targets 90-95 Percent Local Assembly in India

Audi India expects locally assembled vehicles to account for 90-95 percent of its sales as it prepares to renew its product portfolio and reduce its exposure to high import duties and adverse currency movement.

The German luxury carmaker is studying local assembly of the upcoming Q9 flagship SUV at the Skoda Auto Volkswagen India facility in Chhatrapati Sambhajinagar. It is also evaluating the assembly of a larger petrol engine that could be used in the Q9 and Q7.

“The primary focus is how much we can make in India because that will remain our strategy. To be successful, irrespective of the FTA, we will still make in India,” Balbir Singh Dhillon, Head of Audi India, told Autocar India. 

Audi currently assembles most of its volume models and the 2.0-litre EA888 petrol engine in India. The engine covers a large part of its portfolio, but its top-end SUVs require larger powertrains.

“The 2.0-litre engine covers most of our range except the top end, which includes the Q7 and the future Q9. Work is on there as well,” Dhillon said.

When asked whether the Q9 programme could include local assembly of its engine, he said: “We are working on it. If you have to localise the product, there are certain things that become important.”

Q9 Central to Localisation Plan

The Q9 will sit above the Q7 and give Audi an entrant against the Mercedes-Benz GLS and BMW X7. Audi is planning the model with a strong focus on cabin luxury and rear-seat comfort, along with multiple seating configurations.

“The Q9 will potentially be our first product in the D segment. We are working to make it in India at some point,” Dhillon said.

Local assembly will allow Audi to position the Q9 as a regular part of its India portfolio rather than restrict it to small volumes as a fully imported model. However, preparing the assembly line and powertrain programme means the Q9 will take more time than a regular model replacement.

Audi’s localisation effort will largely be based on the local assembly of imported parts and components. Deeper sourcing from Indian suppliers will depend on the volumes generated by each model.

“If you are selling 2,000 or 3,000 cars and want to localise, it is difficult to find vendors locally,” Dhillon said. “Localisation needs threshold volumes. It is not that easy unless the volumes are high.”

FTA to Open Niche-Model Opportunity

Audi expects the India-European Union free trade agreement to improve the business case for importing performance cars and other niche products. However, it does not see the agreement replacing local assembly.

The number of vehicles eligible for lower import duties is expected to be capped. Audi will therefore have to decide which models should be assembled locally and which can be brought in under the concessional-duty quota.

“Make in India will be 95 percent of the strategy,” Dhillon said. “The balance could be five, seven or 10 percent. That is where these models will play as brand shapers. They are the cherry on the cake.”

Lower duties could allow Audi to test more global models in India without immediately committing to local assembly. This could be particularly useful for performance cars that do not have sufficient volumes to justify an Indian assembly programme.

The localisation push has also become more important because of the strengthening euro. Audi has already taken two price increases and expects further revisions.

Dhillon described the transition to higher-cost new-generation products, coupled with adverse currency movement, as a “double whammy”.

While Indian assembly can reduce the duty burden, Audi will remain exposed to currency fluctuations because a significant share of its parts and components will continue to be imported.

Audi’s larger product renewal begins with the new Q3 in the fourth quarter of 2026, followed by the A5 in the first half of 2027 and the Q9. The ability to assemble these models competitively will be central to Audi’s ambition of doubling its share of India’s luxury-car market from 8-9 percent to around 18-20 percent over the medium term.