We expect demand to pick-up closer to festive season, says Audi India chief

We would like to urge the Government/ GST council to reduce GST, import duties, and rationalise the vehicle registration cost on luxury cars, he says

German luxury carmaker Audi expects sales to revive towards the end of this year, around the festive season, while anticipating headwinds in the next few months. The company does not expect any growth until 2021. In an interview with T E Narasimhan, Balbir Singh Dhillon, Head of Audi India, said that the company is planning a slew of launches across segments and want to accelerate its used car business. Edited excerpts:

What has been the impact of Covid-19?

Sales of the overall automobile industry have been impacted. April was a month of zero sales, something none of us have experienced in our lifetimes. While there has been a business impact on most of the sectors, we would like to look at the impact from the perspective of change it is heralding.

How is Audi handling the crisis?

We have worked on a combination of ways to deliver and sustain the business during tough times and in the recovery phase; these include a frugal business approach, strengthening the business ecosystem, effective use of resources, and focus on profitability and liquidity. We have taken multiple steps to ensure brand momentum is sustained.

On the dealer front, we have not only optimised the inventory levels but are also sharing certain interest costs for our partners. Most of our trainings are now being undertaken online leading to cost/time savings.

We have invested heavily in our digital platforms that are helping our partners grow their business online. We also took a giant step forward with the start of our online sales and after-sales support for our existing and future customers.

Any change in product launches?

We have a slew of launches planned for 2020 – this will include a mix of volume and performance models. There has been no major change in our product plan; however, there is a possibility that a particular product launch may move forward or may get pushed by a month or two – this is largely short term.

Our India launch plans for new models in 2020 include a mix of volume and performance models.

We have already launched two new products this year – the Audi Q8 and the Audi A8L and both of these have been very well received by our customers.

With BS-VI regulations, we have decided to revamp Audi’s entire product range in India. Therefore, all our upcoming products will either be brought to India for the first time or will be the next generation or facelift at the least; we shall be doing this in a phase-wise manner.

When do you expect the market will open up? What the Government should do to revive demand?

We expect demand to pick-up closer to the festive season. We would like to urge the Government/ GST council to reduce GST, import duties, and rationalise the vehicle registration cost on luxury cars. We would like to request the GST Council to not categorize luxury cars as sin goods. We are part of the economy; we generate employment opportunities and work on bringing new technologies into the country - hence it is important for us to be considered part of the automotive business. The buyers need to feel confident purchasing luxury cars – this will help expand the market.

What are the lessons learned from Covid-19?

Physical buying in addition to the digital approach of online sales will be the way forward. While customers will spend most of their time looking at the car online and customizing it; a physical visit to the showroom will not be discarded. As Indians, we are accustomed to negotiating and reviewing a car before we make a purchase. Covid-19 situation has also shown us that it is important to strengthen the entire ecosystem and see that all stakeholders derive strength from each other.

Whether it is financial or human resources, it's time to increase the productivity of each asset at hand. In the post-Covid world, the focus would be on the accomplishment of a task rather than a number of meetings or the hours logged in. Similarly, each financial resource must be put into its most effective use.

At the end of the day, each business works for profitability. In difficult times like this, we clearly focus on the profitability and liquidity of the entire ecosystem. We look at newer avenues to expand our reach and include allied businesses in our portfolio.

How you are planning to retain your share?

Strategy 2025 is a long-term plan for Audi India that focuses on four key pillars -- customer-centricity, products, network, and digitalization.

We are not running behind market share but are eager to strengthen the Audi brand in India. Market share at any cost is not our approach. As a brand, we want to be sustainable not just by focusing on sales but “Quality of Sales” that lead to happy customers and a strong brand.

How is your used car business growing?

While the industry saw de-growth in 2019, our Audi Approved: plus business, for used cars, grew by 11% and we are confident of growing in double-digits this year.

Until last year, we had seven pre-owned Audi car showrooms; we aim to double this footprint by the end of this calendar year.  Our approach is clear, we want to sell every car at least twice, if not three times. We will continue to focus on building this further.

Your outlook for 2020 and 2021?

We anticipate headwinds in the next few months and expect to see some boost during the festive season. We expect growth starting in 2021 and through next year.

For Audi India, 2020 began on an extremely positive note. With advanced planning and a focused approach, we sold out all our BS IV stock of cars. We launched the Audi Q8 & Audi Q8L in January and February respectively; the first batch of which have been allocated to customer orders. We are happy to share that we have ordered our second batch of customer orders which shows a keen interest in both our products.

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