We recently caught up with Michael Perschke, Managing Director of Audi India in Gurgaon to speak about the Q3 and the future of the Q brand. The Q3 is the company's first step into the next phase of its growth strategy in India.
Does Audi have a fresh onslaught of models in the affordable segments to keep the numbers ticking? What about the dealer network expansion? Is there a plan to introduce a premium hatchback in India?
Read on to find out!
What is your pricing strategy with the Q3?
We are competing with the Q3 that is a CBU model. Our competitors are assembling their products here. So our product is not competing in the cost point of view but from the market point of view. We came up with a revenue based approach and decided that if we bring the Q3, there should be elements to differentiate it, namely, the brand, the design and the Quattro drive. We are offering a high version and a base version. The base version will be brought to the market in October. And finally the Q3’s production will start in India around spring 2013.
When the production starts, will the excise benefits be passed on to the customer?
At Audi we have one strategy, one product and one price. So the price might not change for the same car and for the same model with these specifications but when the local production starts, there will be more options and variants available.
What about the profitability of the Q3 project?
We have looked at our margins, dealer margins, the marketing budgets and that’s why we are not doing a country launch or a full blown TV campaign. Instead we are focusing on a much smarter and efficient social campaign.
Can you tell us something about the 500 cars booked thus far?
All the 500 cars booked are of the high-end version and a down payment of Rs. 5 lakh was submitted for the booking. The second batch will have a limited number of base variants too. The deliveries of the current bookings will start this week onwards.
What percentage of your total sales are SUV sales?
For the next year, about 40-45% total sales will be SUV sales and that’s why we are now focusing more on bringing in the fresh “Q” cars.
Do we see more “Q” models coming in the near future? What about the Q2?
We can only talk in India about Q models when we have them globally. We are not yet in a position where we can make cars only for India.
The Q2 is not available anywhere in the world but the Q2 will come before the Q1. Whenever the Audi Q2 will be available globally, definitely it is something that would be looked at for India as well because by that time the Q3 will be very strongly accepted and the Q2 might be able to step down a category. People are anticipating the Q2.
How will the Audi Q2 be positioned?
The Q2 will be a new segment. It will be positioned between Q3, X1, Countryman.. somewhere in that space. It will be slightly smaller than Q3 but still a full-fledged SUV.
What is your reaction to SIAM proposing a tax increase of about 2.77 lakhs on the price of diesel cars?
All over the world, we have consumption-based taxes. In Germany for example, about 70% of the price of petrol or diesel are taxes. Its unfair to charge the new car buyers and leave out the existing ones.
For an emerging country like India, the automotive industry can act like a backbone of industrial development.
With the revised diesel prices, will you still be able to meet the target of selling 8,000 cars this year?
At the end of the day, I am not a fortune teller. We have our management and sales team in the right places to make sure we put 8,000 cars on road. If we assure you that we’ll sell 8,000 cars, we will make sure we achieve the target. We have a very strong management, strategy, dealer cum sales network and a very strong brand. There’s a market, there are dealers, there are products and there is our brand. Even when the luxury market is de-growing, we are still growing at 37%.
In India, which is the largest market for Audi?
North India is the largest market for Audi and in north India, it is the National Capital Region where the company is already leading the market with 40% market share followed by Maharashtra. Southern India is still a bit conservative but its slowly moving up.
Will Audi be focusing on Tier-2 cities in the coming future?
Our strategy is to “Defend and Attack” - defend our stronghold like Delhi and second to further strengthen (read attack) the second city i.e. Mumbai and then head south. We will move into Tier-2 cities but our main aim is to find the “local heroes” who are those champions, the entrepreneurs who can give us their time, money and commitment. That worked very well for us at Coimbatore, Indore and now Lucknow.
What will be your capacity of production from the Aurangabad plant in the future?
Currently we will employ two shifts at the Aurangabad plant and the total output with both the shifts running will be about 6,000-6,500 cars. At “Hall-C” (an Audi Specific production line) we have a capacity of about 3,000-3,500 cars and up until next year, when the whole plant is fully functioning, we will produce 9,000-10,000 cars annually.
Which are the cars that roll out of the Aurangabad plant? Will we see any price change in those models?
We will start the production of the Q3 somewhere in spring next year. The 3.0 TDI variant of the Q7 will be produced exclusively in India whereas the 4.2 TDI will still be imported from Germany.
The prices of the current variants with the same package and specifications remain same but we will introduce some more options and more variants.
When are we going to see the Audi A3 in India?
The Audi A3 is a very interesting project. However we need to be very careful with what kind of body style will be accepted by Indian customers. Our competitors are now looking to launch luxury hatchbacks. I personally feel that the Indian market for luxury hatchback is not yet ready.
Out of all the products that we have, the A3 sedan is most likely to come after the Q3 but we first would need to evaluate our product. Then we will see the response to the Q3..and then we will try to create a new segment. We will be able to discuss the launch of the A3 at that point.
The Audi A3 has to have a competitive price tag that will be available only with local production. We will follow the same procedure with the A3 by initially bringing it as CBU and then, if we see that the demand is good, we will manufacture it locally.