After achieving its highest ever sales in India during the 2011 calendar year, German luxury carmaker Audi expects India to continue to be its fastest growing market in 2012. The carmaker has set a target to grow sales by 45% to sell 8,000 cars this year. In the first three months between January and March, the German carmaker claimed it sold 2,381 units, trailing its rival BMW. The success pushed Audi to advance launch entry level luxury sedan A4. Audi India?s head Michael Perschke tells FE?s Debabrata Das in an interview that the company?s strategy for India is based on three pillars ? newer products, more dealers and increased headcount. Edited excerpts:
You advanced the A4 sedan launch. Is this a confidence in achieving higher sales?
The A4 drives the volumes in our sales. We had a great start to the year with the old A4 selling more than 800 units, making it the leader in its segment. We advanced the launch because of the success of the previous model and the demand coming from dealerships. This year, we expect to sell more than 2,500 A4s, out of our total sales target of 8,000. The starting prices of the new A4 will be R70,000 less than the previous model. Due to the A4?s popularity we will also sell it in the sportier S-Line trim. We are also evaluating the launch of the top range version, the S4. We will launch the S4 if our research reveals there is enough demand.
Your sales target for the year is 8,000 units. Will you increase production to meet this target?
We have a capacity of 6,000 units at the plant in Aurangabad. We share this facility with our group company Skoda. But by the end of this year, we will increase the production capacity to 9,000 units. Our models have great demand in the Indian market and we will have the production capacity to cater to the demand. There is enough space to expand capacity at the Aurangabad plant.
You want to be the largest luxury car seller in India. What is your strategy?
Our strategy for India is based on three pillars ? product expansion, dealer network expansion and manpower expansion. We are on track to meet our targets as per this strategy. We have launched the Audi TT earlier this year, the new A4 was launched on Thursday and sometime later in the calendar year?s second quarter we will launch the sports utility vehicle Q3. We also have two more surprises for the final two quarters of the year.
We are also actively expanding our dealer network and by the end of the year we will have 25 dealerships from the existing 18. This year, we opened showrooms in Coimbatore, Delhi West and Nagpur. Further expansions in the dealer network will include Bhopal, Lucknow and Mumbai South. We are also on track to welcome more than 600 new employees to the Audi India family.
The Indian economy is growing slower than anticipated. Will your outlook change?
I think the luxury car segment is a sweet spot in the Indian market. According to our estimates, eight million Indians are willing to spend on products like Audi. We have also noticed a trend where people who are already in the luxury segment want to upgrade and stay within the luxury segment. This is unlike the bottom-of-the-pyramid segment where rising interest rates and changes in prices of cars affects their appetite to upgrade and replace their existing car.
The Budget has not been kind to the industry with both taxes and import duties rising. Will this act as a dampener for your sales?
When April began, every one was worried about the impact of the Budget. But the sales volumes have been much better than expected. For the month of April 2012, our retail sales numbers grew by 50% to 562 cars against 375 cars in the same month last year.
We have made a strong statement of intent by achieving the number two position in the Indian luxury car market, in the first quarter of the calendar year itself. We sold 2,381 cars in the quarter against 1,986 cars in the same period last year. We are in the fast track, but we also have to be cautious not to burnout too fast. India is like a 24 hour race and we know how to win such races.