After having lost its pole position in the Indian market, German luxury carmaker Audi has carved out its growth strategy to maintain profitability.
By Pritish Raj
After having lost its pole position in the Indian market, German luxury carmaker Audi has carved out its growth strategy to maintain profitability. Audi India head Rahil Ansari tells Pritish Raj how the company is not concerned about market share and instead is focused on creating a sustainable business model.
Volume growth for Audi has been a concern and media reports suggest things are turning from bad to worse. Do you think poor demand is a worry for the entire industry or Audi particularly has to do a lot of catching up?
The past 6-12 months have not been easy for the industry. Starting from credit crunch to elections-related uncertainty, consumer sentiments have been weak. From the luxury car industry perspective, volume is the easiest parameter you can be ranked upon, but it’s not the only one. Overall, yes, not many cars were launched in the past two years, but it’s a cycle-driven business and that will also change gradually.
Since 2014-15, when Audi had the top rank volume-wise, you have not been able to get back to that position. Reasons?
I took over the business in 2017. So, whatever happened before that is what I’ve inherited. After the NGT ban on diesel cars which are over 10 years old, a shift happened for us, and it’s not a secret that we could have launched some products earlier that would have been volume models. That’s something that we missed out. Garnering more volumes is not the most difficult part. You can clearly buy market share by higher discounts and schemes, but that won’t do justice to the profitability and the sustainable business approach. We’d rather secure profitability over volume.
Does that mean you will not be chasing market share anymore and not be looking for the number 1 rank? Are you content with the volumes you sell currently?
See, the job is never done, and of course I am not happy with the volumes. Last year we sold 6,433 cars and that’s clearly not Audi’s ambition. But last year was an exception. We had an unforeseen closure of our largest dealership in NCR that impacted volumes. Then we had a global emission shift impact of WLTP, which led to delay in India launches of cars that are coming this year.
How has the tax structure played a role in demand?
Let’s be honest. Taxes are too high in India for luxury cars. Without being arrogant, the top three players have invested a lot of money in India in the past 12 years, making sure that we are ‘making in India’. If taxes are less, we will sell more cars and there will be more revenue generation. With more sales, we will also be in a position to invest more. If taxes don’t change in India, volumes of the luxury segment will always be a stepchild of the industry. Total car sales were about 33 lakh last year, of which only 40,000 units were in the luxury segment. That’s peanuts.
As the India head, what are your top priorities for the brand’s uplift and by when can we expect a strong comeback?
Firstly, to achieve a sustainable business model, the idea is to make sure that we have the right product, after-sales and price mix. In after-sales, we have a project running where we are looking at increasing output in the workshop because there are some processes we can improve upon. The second priority is enhancing the product portfolio. We will have new products coming in the next 12-18 months for sure, which will reflect much higher on the Audi image. The third is clearly people focus, which starts internally by having the best talent, making sure we recruit them and ensure they have enough challenges to want to stay with Audi. Everyone loves a comeback, and Audi will be back.