Indian consumer not price but value-sensitive: King

HERALD: In a market which is not exactly on fire how is the luxury segment faring in the country?

JOE KING: The economy is still in a ‘recovery phase’ and certain pro-industry polices are still underway. However, the luxury car market in India has a huge potential and its performance has been consistent. India’s luxury car market has grown eight times in the last seven years from around 4,000 units in 2007 to more than 32,000 units in 2014. The growing upper middle class is the driver to this growth and for us as well. So while that continues to grow, the luxury car market will also grow substantially going ahead. 

We closed the year 2014 at a record high with sales of 10,851 units and continue to be No1 in the luxury car market. For us, 2014 has been the second straight year when we have topped the nation’s luxury market. It is also the seventh successive year for growth and record sales.

HERALD: What was the rate of growth in the segment?

JK: According to our estimates, the luxury car market grew at 3.6 percent YoY for 2014. 

HERALD: What are the trends emerging in the segment?

JK: The Indian luxury customer is very optimistic and aspiration levels are very high. Trends are followed here much faster and there is a latent hunger for luxury in India. Tier-2 and Tier-3 cities are becoming the new hubs of luxury. 

We have seen that the Indian customer is value-sensitive and not price-sensitive. Our growing number of younger customers prove that if an Indian buyer sees value by way of product offering features and performance, he is willing to pay a higher price for the same. We have several examples of Audi Q3 and Audi A4 customers who have jumped price bands to buy our luxury cars. These customers are looking for better value and not for a lower price. We have also seen a growing preference for SUVs in the country and our luxury SUV range is quite popular and we have been market leading in the luxury SUV segment.  

Customers are also increasingly focusing on customization. They see their car as an extension of their personality. In response to this we offer a host of options across our range and in our higher end cars we offer infinite customization options. The Audi A8 L for instance is the only car in its segment to offer exclusive customization options, from embossing your name / initials in the seat, side sills to interior, exterior colours, the car can be completely customized to suit a customer’s taste. 

HERALD: Goa is a depressed market given that mining has been stopped, how is your brand faring in Goa?

JK: Goa is an important luxury car market and has high potential for growth. We are the current market leaders in the luxury car segment with a market share in excess of 40% in Goa. We have always accorded a high priority to this market.

HERALD: How many models do you plan to launch in the country this year? 

JK: We intend to launch 10 products in total in India this year. The Indian luxury car market is maturing. We have taken bold steps in terms of product launches with exciting new body styles- Ex: Cabrioletand the Avant, and on the anvil are a few more which would be revealed later in the year. As a part of our top down strategy, features from the top models would trickle down to our other models. For eg: We received phenomenal response on the Matrix LED headlights available in the Audi A8 L and we will offer the same in our other models as well. We just launched the New Audi RS 7 Sportback which sports Matrix LED headlights for the first time. 

We’re creating new offerings which we believe have got a lot of long-term potential. Maybe, not a game-changer in the very short-term from the volume point of view but then again we are not here just to try and sell more cars.

We have already launched the limited Edition Audi R8 LMX, the new Audi TT Coupe, the new Audi RS 7 Sportback and the Audi RS 6 Avant. Needless to say, Audi has a lot of excitement planned ahead.

HERALD: Q3 is the market leader in the segment. How big is this segment and what is the rate of growth in this segment? 

JK: Audi Q3 exemplifies all our brand values. It is Sporty, Progressive and Sophisticated, the preferred choice of mobility for many young achievers and continues to lead in its segment. The new Audi Q3 with its refreshed design and technical advancement takes forward the legacy of the Audi Q3. A shining example of outstanding workmanship, the new Audi Q3 features a generous list of equipment such as Voice Dialogue System and Audi Parking System Plus with Rear View Camera. 

SUVs are very functional in India, because of the diversity in the topography. The customer is looking for the best looking car with the best value, best features and space to suit their requirements. This is what makes our Audi Q range of vehicles very successful. Audi is the leader in the luxury SUV segment. Spurred by the demand of our SUVs, we are now locally producing all our Q range models. This move demonstrates our confidence in the success of our Q range, which has positioned itself as a leader not only in the product category, but has emerged as a lifestyle statement. We are confident that we will continue to retain our dominance in the luxury SUV segment in India.

HERALD: What is your overall assessment of the Indian automobile industry

JK: India is a strategic market for Audi and among the top 4 markets for Audi in Asia after China, Japan and South Korea. We closed the year 2014 with a 34% share of the Indian luxury car market which is among the highest for us globally. We see huge potential in the luxury car market in India. We expect the Indian luxury car market to “at least double” by 2020. Fuelling this growth is the rising purchasing power of the young Indian. 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 moving up to luxury cars and this affluent segment has been boosting sales volumes.