‘Local manufacturing is a matter of time – about when and not if’ | The Financial Express

‘Local manufacturing is a matter of time – about when and not if’

Balbir Singh Dhillon, head, Audi India, speaks to Alokananda Chakraborty about how the brand is preparing the ground.

‘Local manufacturing is a matter of time – about when and not if’
Balbir Singh Dhillon, head, Audi India

With a redesigned logo and a new global growth strategy, Audi in India is working on a three-pronged plan —launch of only EVs by 2026, stop ICE-powered car production in 2033 and increased focus on software and autonomous technology. Balbir Singh Dhillon, head, Audi India, speaks to Alokananda Chakraborty about how the brand is preparing the ground. Edited excerpts:

Audi has been speaking of electrification for years now and you said that by 2025-26, only EVs will be launched. Where do you stand in India vis-à-vis that plan?

We launched our EVs only in the second half of last year. Going by the current traction in the EV segment, we may see volumes of EVs more than treble albeit on a low base. The direction of volumes and growth is very encouraging. We are expecting 15% of our sales in the country to be driven by EVs by 2025-2026.

In 2021, our Board announced a corporate strategy, Vorsprung 2030, which essentially means a head start to 2030. With this, Audi as a brand has announced a definitive timeline for the transition to electric mobility; this includes the launch of only EVs in 2026, ICE-powered car production to end in 2033 and increased focus on software and autonomous technology. This strategy is aligned for the Indian market as well.

To realise the goal, local assembly of EVs is going to be critical. How close are you to that target?

Local manufacturing is a matter of time – it is a matter of when and not if. To manufacture electric vehicles in India – we need further investments and to make such investments, we need to achieve a certain threshold sales volume in India allowing us to make strong projections for the future, which is a prerequisite for any fresh investments.

Has the pandemic changed buying behaviour in the segment?

Post-Covid, the YOLO (you live only once) attitude has given rise to the indulgence quotient; there is also an increase in disposable income along with pent-up demand which is aiding growth in the pre-owned luxury car segment. We have registered a steady demand for pre-owned luxury cars and Audi Approved: plus (our pre-owned car business) has grown by 73% in the first nine months of 2022. The demand for used cars has grown in the last 2-3 years; this includes tier 2 and 3 cities. To address this increase in demand, we have expanded our Audi Approved: plus business from 7 facilities in 2021 to 19 facilities currently. We will end 2022 with 22 facilities for pre-owned cars.

That said, the luxury car segment is about 2% of the overall market and it has been at that number for a decade now. Why isn’t the segment in India anywhere near its stated potential?

There is definitely immense growth potential. High tax/duty structure and  layering of one tax on another make luxury cars very expensive in India and is the biggest impediment to the growth of this segment. A relook at the current tax structures will certainly become beneficial.

You launched a rewards programme earlier this year. How does it complement your strategy and what have you done in the area of data protection?

Our Audi Club Rewards programme offers exclusive access, segment-first privileges and bespoke experiences and has more than 150 partners on board currently. We have been making steady inroads into the services space over the last few years with engaging lifestyle initiatives like the Audi Concierge (for anything luxury beyond the car, call Audi Concierge) and several engagement campaigns on the ‘myAudi Connect’ application.

In the space of loyalty programmes, we have run pilots in different geographies over the last year, and these have revealed that customers are always on the lookout for rewarding experiences. The Audi Club Rewards programme has gained significant traction from various locations across the country. 22% of all Audi customers on the programme belong to the South region closely followed by the North and west region customers.

With complete encryption of user data and a secure platform for transactions, the programme is available on digital devices through the brand’s proprietary application, myAudi Connect.

What are some of the megatrends shaping the global auto industry?

The global automotive industry has fared well in the post-pandemic era, with pre-pandemic dem-and levels returning. However, supply-chain issues, semiconductor shortages, increasing tax impositions on imports and production costs, with ongoing international political tension in the backdrop have led to several challenges, causing fissures in the form of pent-up demand for vehicles in various markets.

Meanwhile, the convergence of megatrends like digitalisation, electrification, and integration of advanced technologies into the driving ecosystem poses an exciting future ahead of us.

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First published on: 23-11-2022 at 08:29 IST