Potential buyers of Audi will first focus on setting up and getting their businesses back on track before buying a car in the near term. The company sees a surge in demand for pre-owned luxury cars, says Balbir Singh Dhillon, head, Audi India, in an interview. Edited excerpts:
What has been the impact of COVID-19 on the luxury car segment?
The luxury car industry was impacted due to the lockdown. The strict lockdown had a negative impact on the automotive businesses. While most of our showrooms and workshops are now open, given the easing restrictions, the impact of the pandemic has been felt severely on the overall business.
At Audi India, we have devised newer ways to execute our business strategy. Interacting with all stakeholders via digital mediums, managing teams online, and making business decisions from our home offices are the new ways of working. Our continued focus on digitalisation held us in good stead. At the same time, our employees continue to be the drivers of successful production but with requisite social distancing and safeguarding.
What about sales during the lockdown period?
The first quarter of 2020 saw an over 30% de-growth in luxury car sales. This quarter will probably be worse, given the lockdown. We are happy to report that most of our showrooms and workshops are now open as per directives from the government.
We have begun receiving test drive requests and potential customers are spending time on the website, configuring or customising their cars.
On the after-sales side, service-related requests have picked up very well, as most of our customers prepare to resume their daily lives.
How long do you think the economy will take to rebound?
We are in a phase where there is no historic data we can refer to, to chart our course of action.
Realistically, the luxury car segment will remain muted for some time before growth begins. Optimistically, we could see some spurt in demand due to the changing buying behaviour with a focus on personal mobility. In the absence of other avenues to splurge on like luxury holidays etc., consumers might look buying a luxury car.
As consumers are deferring even non-essential buys, what about luxury cars?
A significant number of MSME owners and business professionals are luxury car customers. We have to respect that these potential buyers will first focus on setting up and getting their businesses back on track, before buying a car in the near term. This being said, we see a surge in demand for pre-owned luxury cars.
Our Audi approved: plus vertical has seen strong demand in 2019 when the new car market dropped 15%; we grew at 11% and expect to grow in double digits this year as well. On the other hand, we do believe that the thought process will change, people will start thinking on the lines of YOLO (You Only Live Once) and will want to splurge on a luxury vehicle in the absence of other avenues, including international holidays.
Is there a change in your sales target for FY21?
Needless to say that the prolonged shutdown has made us take a re-look at our business outlook for the year. Our business is very complex, therefore, regular planning is part of our work. We are happy to share that we have not made any changes to our long-term planning but we have had to make some adjustments to our near-term projects.
At Audi India, we remain focused on executing ‘Strategy 2025’ that focuses on four key pillars – products, digitilization, network and customer centricity.
What about your capex plans for the year?
The decision on additional capex for Audi India will depend on sales growth over medium to long term. At the moment we are well placed to cater to market demand.
Your production ramp up plan?
At the moment, we have the capacity as well as production schedule to cater to market demand. We have opened our plants adhering to government regulations for a safe work environment.
Did you experience any cancellation of orders?
Although we couldn’t deliver cars during the lockdown, our customers have not withdrawn their bookings. We are fully geared up to get back to normal business.
What were the learnings from Covid?
The pandemic has altered the way businesses operate. Business planning becomes key during such times. There are multiple learnings that will be crucial for the future such as phygital experience: strengthening the eco-system, sustainable business and focusing on productivity.
