German luxury car manufacturer, Audi India is eyeing double-digit growth in 2022 and expects electric vehicles to grow multi-fold in the coming years. In a recent interview with Express Mobility, Balbir Singh Dhillon, Head, Audi India talked about the company’s plan on electric vehicles, growing used car space, its new product portfolio and what is stopping India to realise its full potential in luxury car space
Edited Excerpts…
How do you see the Indian luxury car market evolving and have we realised the full potential?
As far as the Indian automotive luxury segment is concerned, we have not even touched the tip of the iceberg. We are just about a percent of the Indian four-wheeler segment and even if you go to smaller markets globally, the penetration is about 5-6 percent. And there are countries where penetration of luxury segment is even 20 percent so, with less than 30 cars for every thousand inhabitants in India with 3 million-plus car segment and luxury car segment doing just about 1 percent there is a huge potential that exists in India.
Why it has not been exploited or used so far? It is primarily because the cars are quite expensive in India and that is because of import duties, GST on our car is about 48-50 percent and on top of that, you pay registration cost which is 10-20 percent (of the total cost) so these factors make this segment to be quite expensive.
One of the biggest problems is tax and duty structure. I only hope that someday this is taken care of by the government. And we are able to expand this segment to 3-5 percent of the overall automotive four-wheeler segment and that is where we see huge potential for India.
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What are the new segments and trends that you see emerging for Audi in India?
Five years back most of the luxury cars segment were bought either by industrialists or real estate players but that is not the case anymore.
Luxury cars are been bought by multiple verticals now whether it is doctors, lawyers, chartered accountants or even the startup founders who have been able to do incredibly good for themselves. Today there is no limit, no single segment that you can speak about where the luxury segment has not found its dominance, even the CEOs, CFOs of organisations are able to buy the cars. As the buying potential is growing in the country the young population wants to spend the money not just to save the money. At present, what we are seeing is a very mixed pack of buyers across the segment. We are also surprised to see the customers having a vehicle worth Rs 20-25 lakh straightaway jumping to buy a luxury car in the range of Rs 80-90 lakh.
This year in the mass car market segment we have seen SUV sales surpass cars. Is the demand similar in the luxury vehicle segment?
In the luxury segment it is still half-half, 5-7 percent of sales are driven by the sports car but if you keep it on one side the balance is still divided between the sedans and SUVs. Because many customers are driven, they are not driving most of the times in such cases the sedan becomes the much more comfortable proposition however when it comes to self-driving the customer preference is always a SUV.
How has been the response of your electric cars? How is the segment growing?
We launched 5 electric cars last year between July and September. We have seen a very positive response from the customers, and in fact, it has even surprised us.
It only shows the belief of Indian customers in the luxury space that they would want to buy electric cars, not only the customers who are buying but their families are involved in this decision, sometimes the youngsters are also helping in making decisions for the customers.
It is a very encouraging response, also making us believe that electric acceptance in this country will happen much faster. That’s all we anticipated a couple of years back.
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What is your sales outlook for the next 3-4 years and how much percentage of sales do you see coming from the electric vehicle portfolio?
Every passing year the percentage will grow. We launched the electric vehicle offering in the second half of last year. It was the first year when will get the full year numbers and I am already saying this that it will be a decent percentage of our sales and in next four-five years. We do think that our contribution to our sales will be in the range of about 15 percent from the electric mobility.
Yes, we will get more models as we move on, and all the future models that we will launch will also help us increase our percentage but at this time 5 models we are selling extremely well and have a very positive response.
With a number of electric vehicles being introduced by Audi, how do you see the charging infrastructure evolving?
We ourselves have installed over 75 charges across the country. Not only at our dealerships and workshops but also at some of our group companies, showrooms as well at our strategic locations. There are thousands of charges across the country now, most of them today are AC low-speed chargers, but also high-speed DC chargers are being installed between cities on the highways. This is something that is developing and growing fast, it is just a matter of time when this will become mainstream.
There are a lot of efforts being made by private companies, the government is also directly pushing this topic from their side and it is helping everybody. Simultaneously, we are engaging with most of our EV customers on a regular basis. Most of them are charging their cars at their residence.
Anyways, most of the cars that we are selling have a range of 375-400km on one full charge and within the city, the average usage of the car is about 100km a day you do not even need to charge the car on daily basis. But yes, the charging infrastructure between the cities where we have high-speed DC chargers where you can just top-up and carry on with your journey it really helps and boosts the customer confidence.
When it comes to EVs, what is your localisation plan?
Audi globally has already declared that we will be a fully electric car company by the year 2033. All completely new models that we will launch from 2026 onwards will be only electric. Of course, we will continue to sell what we have launched till 2025 till 2033 so, the direction is very clear, and if we have to scale up these operations in India one day.
We will also need to make these cars in India. Right now, we have just launched 5 models that we are testing the market. We are working very hard with our headquarters to analyse which models to be brought in and what time needs to be brought in, what needs to be brought in local manufacturing and local assembly. The right decisions will be made at an appropriate time, it is a question of when and not a question of if. Because if we have to become a fully electric car company we have to move in that direction.
From April 1, 2020, when we moved from BS-IV to BS-VI we already decided that from the diesel plus portfolio we will move to the petrol and electrification portfolio. The first step we have already done, and we are very positive about it. We have received fantastic responses from our customers. It has only increased our confidence; it is a matter of time and we are working with our headquarters at some point in time we will take this decision and share it with you.
What are your plans for expanding your network in India?
Right now, we have 60 touchpoints across the country, and they are good enough to cater to our needs for the next 3-5 years. We are reaching out to more territories with our workshop first approach.
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There is a lot of action happening in the used luxury cars space, what’s business looks like for Audi India?
Most importantly what we are doing right now is expanding our Audi Plus Pre-Owned car business. We had 7 outlets by the end of 2020, we doubled them to 14 outlets by the end-2021 and we will take them to 20 by the end of this year. As the commodity prices are going up, the car prices too is also going up.
The gap between the non-luxury segment and the luxury segment is widening. So, it is important that we also play in a field which is in between; we also need to bring more and more customers into our fold if not with new cars but also from pre-owned car channels so that is something where we are seeing robust growth that is what we are focusing right now.
A couple of weeks back we inaugurated our showroom in Kolkata, this is a constant exercise which we are doing to reach our customers as close as possible.
This business is growing even stronger today than our new car business. That is also because we entered the segment in India 3 years ago. We are doubling our showrooms and doubling or tripling our teams.
We are expanding our network in Audi approved plus every year, we want to give a fantastic experience to first-time luxury buyers who are coming to us through pre-owned channels and also at the same time comfort our own customers who want to sell their existing car and want to buy a new car.
We offer these cars with extended warranties, service packages, 300 points to check all those actions that we are doing this business is as large as our new car business, it is becoming more organised which is helping our customers.
