On Thursday, German luxury car maker Audi reported record 2014 sales in India...
On Thursday, German luxury car maker Audi reported record 2014 sales in India at 10,851 units, a growth of more than 8% over 2013, thus retaining its leadership in the Indian luxury car space—the company had sold 10,002 units in 2013. “We are delighted that we are the first luxury car brand to notch up a sale of more than 10,000 cars for two years in a row while maintaining our momentum of growth in India for the seventh consecutive year,” Audi India head Joe King says. In an interaction with Vikram Chaudhary of The Financial Express, he adds that heavy demand, which far outstripped supply, enabled the company to achieve a stellar sales performance—Audi also reported its best-ever quarterly retail sales (October to December 2014) of 3,044 units, registering a growth of 17% (during October to December 2013 it had sold 2,611 units). King says that, in 2015, Audi will launch 10 new models, including the Audi TT, Audi R8 LMX and the new Audi Q3, and will continue to open dealerships all over India to maintain the company’s growth momentum. Excerpts:
Of the 10,851 units Audi sold in 2014, which model saw the highest sales?
We have retained the market leadership position owing to our world-class products which are unique in terms of design, value-added features and services. Each model in the Audi portfolio appeals to a distinct customer set. We cater to the younger customer base who like to drive, who like luxury and who are looking for a great choice. From the volume point of view, Audi Q3, Audi A4 and Audi A6 have been the key contributors and now the Audi A3 compact sedan has also joined that group.
It is expected that, by 2020, luxury car sales in India will constitute 4% of total car sales. It is also expected that, by 2020, Indian car market will be around 5 million units—and 4% means 200,000 luxury car sales. Isn’t the number overoptimistic?
The economy is still in a ‘recovery phase’ and certain pro-industry polices are still under way. However, the luxury car market in India has a huge potential. Our record sales performance is testimony to the growing market. This is also a reflection of the changing lifestyle of the affluent class in the country. In addition, the average age of an Indian millionaire has come down to 35-40 years from the earlier average of 50 years. An increasing number of young entrepreneurs and professionals from various fields are buying luxury cars and this affluent segment has been boosting sales volumes. I believe the Indian luxury car market will develop further and there will always be opportunities going ahead.
Today Audi is the luxury car market leader in India. But to maintain that position the company will have to keep launching new products and also expand its network in India…
For us, 2014 was the second straight year when we have topped the nation’s luxury car market. We are now looking forward to an exciting 2015 with limitless luxury in store for India with 10 new models including the Audi TT, Audi R8 LMX and the new Audi Q3. With our existing investor partners, we will continue to open dealerships all over India, including the soon-to-be-inaugurated Ranchi, to maintain our growth momentum.
Which all Audi models are currently made in India? Which all are planned to be made in India?
We currently produce the Audi A4, Audi Q5, Audi A6, Audi Q7, Audi Q3 and Audi A3 sedan in India. In fact, as a first ever for Audi India, the A3 compact sedan was produced in India even before its market introduction. Of the total volumes sold in India in 2014, more than 90% of the cars were built locally. We constantly evaluate the potential of new models being produced in India.
Very soon the Audi A3 will face competition from the Mercedes-Benz CLA-Class. Do you think this will lead to a price war in the compact luxury sedan segment?
Over the years we are witnessing a trend of customers steadily migrating to luxury brands and this inspired us to introduce the A3 compact sedan in India. The compact luxury sedan segment is growing the fastest within the luxury car industry and the introduction of the A3 sedan has further strengthened our dominance in this space. We believe the A3 will continue to dominate the segment.
The government has discontinued the excise duty cut for passenger cars. How will that affect luxury car sales?
As I said, the economy is still in a recovery phase and the market condition is strained. Now, the discontinuation of the excise duty cut has dampened the spirit of the luxury car market to an extent; however, we will keep offering a comprehensive range of vehicles that offer fantastic value to the customers.
Is Audi on the way to celebrate 2015 as the luxury car player having the widest dealership network and after-sales service network in India?
For the Indian market, a strategy has to be right and ours has been on track. We will continue to focus on the four strong fundamental pillars in 2015: expansion of product portfolio and service offering; expansion of our dealer network in the country; progressive customer connect initiatives; and a strong team. In fact, the Audi network today has a unique spread which covers maximum number of cities amongst luxury car manufacturers. In 2014 we expanded our national network to 61-plus customer touch points, and opened new showrooms in Udaipur, Visakhapatnam, Nashik and Kozikhode. Going forward, we will focus not only on the metros but also on tier-2 and tier-3 cities of India. We aim to reach out to Audi enthusiasts even in the Indian hinterland.
What are your plans for the Audi Approved Plus? What percentage of luxury car sales in India are pre-owned luxury cars?
The pre-owned luxury car market is growing at a rapid pace. With rising incomes and growing aspirations, the demand for pre-owned Audi cars has also witnessed a significant increase in the recent past. We started the Audi Approved Plus from Gurgaon by inaugurating one of the largest pre-owned luxury car showroom with a 33-car display area. Soon we will start Audi Approved Plus in markets where Audi has a car park of more than 1,000 cars.
Audi claims its cars have “good residual value”. What does this mean?
Our pre-owned cars due to high quality of after-sales service are a great attraction in the used-car market. This has been a key driver for the customers while making a choice for even a new car purchase. Good residual value plays a big part in cost of ownership, allowing customers to recoup a greater portion of their initial outlay back at the time of selling their car. This has been achieved by strong demand and our focus on the used-car market.