The company is betting big on the new model to stretch its leadership in the Indian market and is targeting a new segment of the compact luxury sedan besides tapping repeat buyers.
The A3 sedan falls in the price bracket of the likes of hatchbacks A Class and B Class from Mercedes Benz and 1 Series from BMW which has improved the affordability of luxury auto brands in India.
"We think this is the right product for self driven, young customers in urban environment. Besides, we are also looking to those existing Audi customers who are looking for second car with the A3. We expect 15 per cent of our total sales to come from this model," Audi India Head Joe King said.
He said the A3 is expected to join the compact SUV Q3, sedans A4 and A6 as the company's growth drivers in India. The A3 is available in both petrol and diesel variants.
The petrol variant powered by a 1.8-litre engine will come at a price of Rs 28.95 lakh.
The diesel version of the A3 with a 2-litre engine comes in four variants priced at Rs 22.95 lakh, Rs 25.95 lakh, Rs 29.95 lakh and Rs 32.66 lakh (ex-showroom Delhi).
Commenting on sales growth, King said: "As expected in the first half of the year, the industry growth was flat but we expect sales to pick up in the second half. As for Audi we are looking at double digit growth this year, which will be another record year for us."
In 2013, Audi sold 10,002 units in India, becoming the first luxury car maker to cross the 10,000-unit milestone and stay as the number one ahead of German rivals Mercedes (9,003 units) and BMW (7,327 units).
"Next year when we will have the full year sales of A3, we expect to do even better," King said.
Betting big on the A3, Audi India has already started local production of the model from VW group firm Skoda's Aurangabad plant.
The A3 is the first model from the Audi stable to be locally produced before being launched in India. Other models, such as sedans A6 and A4; SUVs Q5, Q7 and Q3 which are locally produced now were imported as completely built units (CBUs) at the time of launch.
King said the local production of the Audi A3 Sedan in India is continuation of the company's growth strategy and consistent focus on the Indian market.
When asked if this strategy would be continued with other future products, he said: "That's something we will consider as we expand our product portfolio here in India."
The annual capacity at the plant for all Audi models is more than 14,000 units in a one-shift operation.