German luxury automobile major Audi is facing an uphill task in India with reduced sales volume. Rahil Ansari , head, Audi India, discusses various issues and how petrol and electric cars will be the future. Excerpts:
What has gone wrong with Audi India? You were number one once and now, gone to number three among luxury carmakers.
Nothing has gone wrong. When we came to this market, we were the last one to come. From number three, we went to number two and then to number one. Then, we went to number two and now, we are back to number three.
The luxury segment is very product life-cyclic business and more the products you launch, the more cars you sell. We had a couple of firsts in getting to number one, which was namely the A3 and the Q3 volume models.
We did a couple of firsts like the SUVs Q7s in 2006, Q5 in 2011 and Q3 in 2013, so this helped us to get there.If you look at past years, we didn’t have as many launches as all of our competitors, which is one of the reasons why you don’t sell the volumes that you were selling earlier.
If you look at the product range that we have at the moment, of course, some of those models are at the end of the life cycle. That also is then reflected in the sales that you have typically. Of course, this will also change, because by the end of the day, the product life cycles are there. But, we do believe that we have to add to the product life cycle not only for the sake of offering the entire product range but we need to do justice to it.
Last year, we had an unforeseen closure in the NCR which was one of our largest dealerships and then, the change from the emission life cycle in Europe and the WLTP which led to our coming out with some of the other models a little later than expected.
I do still believe that the volume segment, overall, is not doing as great as it could be in India. The cake is not really getting bigger, which is mainly on account of credit crunch and it’s on account of taxes. The taxes are very high, it’s not really favourable.
So, it will go both ways. Now, when it comes to the products, of course, it’s the year of the 8s. We will launch the A8, the Q8, the R8, this will all come in the second half of the year, most likely [by the] end of quarter three, beginning of quarter four.
This is typically the timing where we will have quite a few launches. We are working on a few more models for this year.
We don’t have the final confirmation yet, so unfortunately, I cannot disclose anything at this stage but there may be one or the other model this year. For sure, there is something more planned for next year.
You sold 6,463 units in 2018; was this a conscious decision to sell less?
It was not a conscious decision. There are things like product life cycle. But I do believe that being too aggressive doesn’t make sense, because if you look at the entire product portfolio, we have a lot of products. But for the size of 40,000 units (market in India), it doesn’t do justice to have a much larger product portfolio.
So, yes we need more models. And, we will come up with models which will have higher volume impact. I do believe that in order to launch more cars and a much larger model variety, you need to have crucial changes in the entire tax system.
Are you BS VI ready?
We will be ready on the first of April 2020.
When will Audi roll out its first electric car in India?
We have done a lot of development on this.
Our employees are fully trained on high voltage batteries and we have certified technicians from Audi India. We are ready with our concepts to roll out the E-tron. I hope the E-tron will come out by 2020.
But we are trying to make it a little earlier. It is a fantastic car, I do believe that electric mobility is the right step. The E-tron has a huge battery of 700 kg with 36 modules, it is amazing to drive, and has a lot of power, nice features and its very complex also because it has a high voltage battery, virtual side mirrors and everything. That shows the new technology of Audi.
I do think that electric vehicles will do well in India and of course, the question is how the government is going to push the infrastructure roll-out.
While there have been developments in a positive manner with GST implementation with lower taxes for electric vehicles, and some pilots running on infrastructure, of course, [they] have to be further pushed.
We are hopeful that once this is done, we can also bring out the car.
When will you manufacture electric cars here?
It is too premature to talk about this, and if there are not any favourable changes for the luxury segment, then there is no need to discuss that, to be honest, at this point.
You have said people will buy more petrol cars. So, how will you change your production strategies and sourcing?
The product strategies in that sense will change. For the moment, we offer in all the models that we have, the petrol as well as the diesel versions.
We will, of course, focus more on petrol engines now; that is a clear strategy. For new cars, you will see a ‘petrol first’ or ‘petrol only.’Then we will decide whether this makes sense or not but we do believe that this is a right step. For example, the Q8 will be coming with the petrol engine.
Are metro markets saturating, prompting you to look at tier 2 and tier 3 markets?
The metro market has not yet saturated.
There is still a lot of potential and if you look at the entire volume split, a large part of the volume comes from metros and that will always remain the case. I do believe that there’s more potential in the metro markets because you still have an upcoming middle class there; especially those that are entering corporates.,
What is the outlook?
The luxury market is challenging.
The credit crunch is not necessarily improving. I do believe that it has to change.
The positive mindset has to be there. I don’t think that the automotive segment will recover in 2019 fully. It will, rather, happen in 2020, or even in 2021. Because, then you will have the BS VI that will also disrupt the market.
Then, 2020 is going to be challenging and from 2021 onwards, I think the market will stabilise. [Till then], it is going to be a very intense and challenging [market].
