Audi India’s Aurangabad manufacturing facility has restarted operations, and the parts warehouses in Pune, Bangalore and Gurgaon have also opened. However, with Mumbai still in the red zone, Balbir Singh Dhillon, the head of Audi India, is working from home. This, among other things, has given him time to plan the year ahead. In an interview with FE’s Vikram Chaudhary, he says that Audi’s Strategy 2025 remains intact, no planned car launches for this year have been cancelled, and digitalisation will play a major role in engaging with the customer.
How do you read the Covid-19 stimulus package? Can it indirectly revive the luxury car market?
The push by the government is on the supply-side, and not on the demand side, and the actions that have been taken are medium to long term. This will have a positive impact (on the luxury car market) as owners of SMEs form a major part of our customers. However, as we return to normalcy, these prospective customers would first like to bring their business back on track, and then focus on buying cars. Over a period of time, this will lead to new car sales.
By when do you think the market will revive?
It’s hard to put a timeline, but as the festive season starts, it might start to pick up. In 2020, overall, it will be degrowth over last year. But in 2021 we could see growth over 2020, because 2020 would have been a low base.
To boost sales, will luxury cars be sold in stripped-down versions?
Even entry-level luxury cars are expensive, and customers expect a certain level of plushness. Knocking off some features and bringing prices down is not the right thing to do. What we can do is work around financial packages—products such as step-up EMI or balloon EMI. It is better to introduce such financial products rather than removing luxury features from a car. We are working on such a scheme.
While new car sales will be impacted, do you see used car business (Audi Approved Plus) getting more traction?
In 2019, while Audi India’s new car sales declined, the used car business grew 11%. This year also we expect our pre-owned car business to grow faster than new car business. Pre-owned cars help customers enter into the brand earlier than they would have otherwise done. The idea, essentially, is to sell each car twice—first sell the new car, then take it back from the customer and sell it again in the pre-owned sales channel.
Our new Gurgaon showroom has space for seven new cars and 14 used cars. The right-sizing is happening.
How will digital sales change your dealerships?
Digitalisation plays a major role in engaging with a customer. Audi was the first luxury carmaker to introduce a digitalisation roadmap, i.e. myAudi Connect, last year. Going forward, it will be a phygital sales experience for customers, i.e. a blend of physical and digital. At the same time, in the luxury segment, one-to-one interactions (between salesperson and customer) are very important, so I don’t think going digital will lead to job losses at dealerships.
Going forward, can carmakers sell directly to end-consumers?
A car has to be sold through dealerships; they are not middle men, they are our partners. In a car segment, direct buying and selling between a customer and a car company cannot happen; a car company cannot directly go to everybody, there have to be channel partners.
Have any launches planned for 2020 been cancelled?
Our Strategy 2025—focusing on innovation, profitability, sustainability, new product launches and digitalisation—remains intact. This (current times) is a temporary dent. There could be adjustments to our product launch plans, but nothing has been cancelled so far because of Covid-19.
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