Audi India expects some smart surprises with Q2, its smallest SUV offering launched recently. In a tete-a-tete with ET Auto, Balbir Singh Dhillon, head of Audi India, shares the new initiatives and the strategies to improve sales during the buoyant festive season. “We have witnessed a rise in sales in Tier-II and Tier-III cities. The contribution to volumes is increasing steadily. Our digital initiatives are also taking us closer to the customers in smaller towns,” he said. Edited excerpts:
Q. With your strong line-up of SUVs, what’s in store for the newly-launched Q2? Will it help Audi increase SUV sales and breach the current 46% mark and screech past the sedans portfolio in the Indian market?
We have been extremely successful with our Q range of vehicles in India, and Audi Q2 should be no different. It is a ‘luxury all-rounder’ that is big on features and extends the successful Q-family. Audi Q2 is targeted at the increasingly progressive, young and urban customers. It will open new avenues for the brand by helping us reach a new set of buyers and attract customers in a new segment.
SUVs have been an integral part of Audi India’s line-up since 2006 and already account for 46% of the total sales for Audi in India. With the introduction of Audi Q2, followed by other new generation Q models, we expect the share of SUVs to move up in the coming years. Our current SUV product portfolio, including Audi Q8, Audi Q8 Celebration edition and the top-line Audi RS Q8, is doing well and solidifying our category leadership. In parallel, our focus will continue to be on sedans and top-of-the-line models.
Q. Do you plan to assemble more of your CBU models to qualify for lower taxes and make the prices competitive for the Indian customers? What’s the strategy to propel your sales in the pricier sports range?
For the local production of any model in a country, we should have a strong business case, ideally over 85%-90% of our volumes. It is our ongoing endeavour to produce more cars in India so that we can offer them to a wider range of customers. For the high-end luxury cars and the sportier range, our focus has been on a top-down strategy.
We rapidly brought in products like Audi A8L, Audi Q8, and the RS models that worked at the top of the line. At this end of the luxury segment, our focus has been on their personalization; every such car is unique and reflects its owner’s personality. These products are brand shapers and important part of our product portfolio and strategy.
We focus on C & D segment cars, and their success is a testimony to the brand’s appeal at the top-end. Looking at the bigger picture, we need a favourable policy framework to expand the luxury segment in India. We have to keep in mind that the luxury segment is just 1.0% of the overall Indian passenger vehicle (PV) market.
Q. What is the sales trend during this period of COVID-19? Is there a shift in consumer profile as Audi has younger audiences and customers in its portfolio?
The sales trend in this COVID-19 period has a dramatic change, and we are witnessing a return in demand. We registered the highest sales of Audi A6 in August 2020 since its launch in October 2019. This tells us that demand for luxury cars is here. The consumer profile has shifted very little for us at Audi.
Businessmen and women, who used to travel shorter distances by flights, are now opting to drive or to be driven rather than take a flight. The younger generation is more aspiring and more willing to spend their money. Many youngsters aspire to get into the lap of luxury. We opened bookings for the Audi Q2 only on October 3, but have received over 100 bookings.
This validates our confidence that there is an inherent demand in the market for compact luxury cars that offer great value. Many of these customers are first-time entrants to the luxury space and want to enjoy the lifestyle associated with the Audi brand.
We have also witnessed a rise in sales in Tier-II and Tier-III cities. The contribution to volumes is increasing steadily. Our digital initiatives are also taking us closer to the customers in smaller towns which have a significant impact on our sales. We have taken the digital experience to the living rooms of our customers and are giving them the flexibility to purchase their Audi of choice.
We have had over 40k interactions on AR where enthusiasts, customers and potential customers have interacted with the brand in the lockdown period, during May-June 2020. Today, 18%-20% of our sales come from the online medium. Everyone is connected on their phones, and everything is available online – this was the genesis of our digitalization strategy. Our app ‘myAudi Connect’ offers exciting customer-centric features. The latest version of the app provides several additional functions.
They include login for Audi Club India members, payment options to enable in-app merchandise purchase, exclusive offers from Audi Concierge on car-life products and online help and support. All these are within a secure framework and in compliance with data protection regulations. These features are offered as standard for all Audi customers. Potential customers and enthusiasts get access to features like augmented reality, placement of test drive requests, product brochures and service cost calculators among others.
Q. Does Audi feel that the next growth would be from small cities and towns where the current demand lies? Please share your experiences and examples as your network in Karnal, Coimbatore, Lucknow, Baroda, etc. is bringing in good numbers.
Our sales in Tier-II and Tier-III cities are growing gradually, and we expect it to pick up further during the festive season and through 2021. With an increase in disposable incomes and aspirations of owning global brands, the contribution to the volume is increasing steadily from smaller cities. We also see a positive trend of customers in these cities who have an appetite for performance and lifestyle cars with new body styles.
During the last five years, our share of sales from non-metro markets has grown by 10% to over 50% now. As a brand, we continue to expand our footprint in regions that exhibit rising aspirations to own luxury cars. For Audi India, the idea is to identify locations that are important in the future. Through our ‘Workshop First’ strategy, we are entering Tier-II cities with a Service First promise.
The concept is to open an Audi workshop to service the car parc in a particular town, which may be available in that location owing to showroom proximity. Our online engagements have not only come in from metros but also other cities like Karnal, Coimbatore, Lucknow, Baroda, etc.
Lastly, ‘Audi Approved: plus’, our pre-owned car division, has been showing good growth even when the overall market was constrained; it grew at 11% in 2019. We believe that it is going to be one of the major growth drivers for us in future as we have a clear focus on selling every car twice, if not more.
Through the pre-owned car programme, we can give a new section of customers the Audi experience even before they buy a new Audi car. Flexible financial products and “Car Life” products like Service Package up to eight years, Extended Warranty up to seven years (segment-first) and Roadside Assistance (segment-first) up to 11 years are also available for pre-owned customers.
Q. Audi focuses not only on growing sales volumes but also on developing the brand profitably and sustainably. How do you justify your shift in strategy as you recede to third/fourth spot in the luxury segment?
At Audi, we want to be the most progressive premium brand with the best customer experience. We want to be the brand with the greatest appeal, fascinating customer-relevant innovations and breathtaking design. We have to keep in mind an entire ecosystem. It is crucial that we deliver the best value to our customers, retail partners and other stakeholders.
As a brand, we want to win, but win holistically; our sustainable business model shapes the future of Audi in India and globally too. Audi India has charted out a five-year plan, ‘Strategy 2025,’ that focuses on four key pillars: Customer Centricity, Products, Digitalisation and Network. Even in these troubled times, we have made progress towards our larger sustainable growth. I would be happy if we are number one, but I would be happier if all our stakeholders grow sustainably. As a brand, we are focused on growing profitably and sustainably.
Q. What’s the scope of Digitalisation? How has been the experience with your customers? How are the augmented reality (AR) and virtual reality (VR) experiment going for Audi’s online and on-site sales?
Digital customer-centric initiative is a focus area for Audi and a key pillar of the ‘Strategy 2025.’ Audi India is the first luxury carmaker to unveil and introduce a digitalization roadmap, “myAudi Connect.” The latest version of the ‘myAudi Connect’ app builds on features like customer safety and security, driver behaviour info, Audi Concierge facility, geo-location and service bookings that were offered earlier.
Potential customers and enthusiasts get access to features including AR, placement of test drive requests, product brochures and service cost calculators, among others. Since its introduction in May 2020, there has been a real spike in the number of people reaching out digitally; and unique visits on our website have gone up 35% over last year. Configurations on the website have seen 50% spike this year compared to the previous. And 18%-20% of Audi India’s lead generation– which eventually converts into purchases – happens through online channels, and this is growing.
More than 40k AR experiences have been taken just during the lockdown period (May-July). We are not forcing this to happen by pushing conventional bookings or sales to online by providing any freebie or incentive, but we are looking at growth to happen organically.
Q. Has Audi India been able to resolve its ‘dealer distress’? How are you dealing with your sales and service partners and ending customer woes by addressing their perpetual concerns?
There is no ‘dealer distress’ at brand Audi. Our dealer partners are our key brand pillars. COVID-19 has grounded the entire value chain of the automotive business in India; impacting all stakeholders. At Audi India, we have taken multiple initiatives to ease the burden on our ‘partners’ and that has helped us come out of it together.
Some of these steps that we have taken include optimizing inventory levels and sharing interest costs for our partners. Most of our training is being undertaken online leading to cost and time savings. We have invested heavily on our digital platforms that are helping our partners grow their business online. Also, for a long-term sustainable business, we have taken many actions to support our partners’ profitability and short-term liquidity.
Q. With an extreme range for sales in India, what are the launch plans to expand your portfolio as competition goes on a product offensive. How would Audi India steal the thunder?
There are exciting times ahead. Audi Q2 is our sixth product in the last ten months, and one more product is going to come this year, followed by many more next year. We will continue to bring more models into the country, which will be a good mix of volume products as well as top-end and niche products. The challenge isn’t stealing the thunder or taking share from each other; it is important we grow the luxury car market altogether.
Q. How is the festive season going, is a revival likely?
A: In order to kick start the festive celebrations, we introduced the Audi Q8 Celebration model priced at INR 98.98 lakh ex-showroom. Since its successful launch in January this year, Audi Q8 has received an overwhelming response, and we are confident that with the new Q8 Celebration we will be able to widen the appeal of this irresistible Q SUV model. For the newly-launched Audi Q2, we are offering a ‘Peace of Mind’ package that comes bundled with a complete service package and 2+3 years roadside assistance. This is for the ease of ownership for the customer who is entering the lap of luxury. We have also commenced our Festive Celebration Programmes on certain products including Audi A6, for this festive season with a lower rate of interest or peace of mind package, up to five years.