“The most important car for us in our portfolio is the Q5,” says Balbir Singh Dhillon at the sidelines launch of the 2021 Audi Q5
We caught up with Balbir Singh Dhillon on the sidelines of the launch of the Audi Q5. The Q5 is a hugely important car for Audi in India. With local assembly, Audi has priced it on par with rivals and that is a sign that it is beginning to chase volumes again, with the Q5 pushing those numbers. We spoke to Balbir on the importance of the Q5, the plans for the future when it comes to local assembly, Audi’s strong push with electrification and even the fact that there are no diesels in the current (or future!) line-up. Here’s how our conversation went down:
Aatish Mishra: How important is it to have the Q5 back in the range?
Balbir Singh Dhillon: The most important car for us in our portfolio is the Q5 – that will not be wrong to say. This has been one of the most successful models that we've been selling for the past many, many years. And I can tell you that many customers of Audi Q5 have repurchased the same Q5 or the next-generation Q5. They love this car so much. It is the most practical car in our portfolio and the customers just love it. Whether they drive by themselves or they're driven with drivers for a family of five, whether you are driving in the city or off-road, it's one of the most practical cars in our portfolio and the customers love it. So from that emotional point of view, from the volume point of view from, let's say even price point of view – this is one of the most attractive cars that we have in our portfolio. And with this generation that we're launching today, it'll only become stronger.
AM: You said that you all are sold out for 2020. Can you share how many units that is?
BD: As of now, we have booked over a hundred cars that we will sell till the end of this year. We already started to book for January and I am hopeful that January also will sell-off sooner than later. This is some of the initial feedback that we had from our customers, even without the prices that we had announced. The customers have been really waiting for some time to get this car to get hold of this car. And many of these customers are our existing customers only, who want to sell their existing Audis and buy a new one. And of course, there are first-time buyers as well. So I think from that point of view, it has been a fantastic response so far, and I'm sure with the pricing announced today it will only become stronger.
AM: Now you have the Q2, Q5 and you have the Q8, you said there are more Q SUVs coming. Can we expect more aggressive stuff, maybe a locally assembled Q3?
BD: So, without getting into the details of what will be manufactured, I think I'll answer this question in general. I think sustainability in the country can only be done if you make cars locally. I mean, 80 per cent of our portfolio has to remain locally produced and then you can survive with another 20 per cent being fully imported. And that's what our endeavour has been and will be. Because at the end of the day, the duties structures are such that it only encourages manufacturing cars locally. I think this is how we will remain. All the options are on the table. Whatever makes a positive business case, we are there to invest to bring and make more and more cars locally.
AM: No diesels. Is this something that you're going to stick to? Your rivals and competitors are pushing diesels? Do you all feel like you're missing out?
BD: Honestly no. If you had asked this question two years back I probably would have been a little hesitant to give you an answer like this, but at this point in time, after the last one and a half years of experience that we had with the TFSI technology, it's absolutely amazed us. Do you know, customers are so forward-looking, positive towards future technologies and they are really embracing the new technologies and accepting TFSIs. So there is no need.
The other thing which probably I would add here is that the volume segment is all tilted towards petrol. So from where our customers are moving or graduating to the luxury segment, they're already coming from petrol segments. Then you already see a large percentage of customers, even in luxury segments have moved from diesel to petrol and now towards electric cars. The earlier it is the better it is. Of course, everything comes with a little bit of pain. I think we've had our lessons, but we are very, very strong and we have no doubt that TFSI is very well accepted. We don't need to add a diesel portfolio, and focus on electric mobility in the future.
AM: The future is electric. You all are pushing electrics very heavily, but today the volumes are still in ICEs. So how do you straddle that path – the present and the future going for the next few years?
BD: You're absolutely right. Right now we are limited by two things. One is high import duties and no local manufacturing of electric cars. So I think these are two stumbling blocks at this point in time for electric mobility to flourish. Partly, it is a request of ours into the hands of the government that if they allow us a window of three to five years where they reduce the import duties on electric cars. If we are able to, let's say, reach a minimum threshold volume, where we are able to plan for the next five years, saying that 'yes we have reached here and for next five years we can reach this number.' – if that makes a positive business case, we are able to convince our headquarters to invest in India once again for manufacturing locally, or assembling electric cars in India. But till that time, it will remain a challenge. You already know that we've announced that we want to be selling 15 per cent of our volumes by 2025 in electric mobility. That is at this point in time, our next challenge, but of course this can all advance strongly if we get some favourable response from the government.
AM: What's been the response from our customers to e-tron and e-tron GT?
BD: Amazing! I mean, it's really, really astonished us. It's a very positive response. Again I'll repeat what I've been saying – we sold off our first and second lot of car,s and now I think we’re booked till January. So we are now able to sell even future orders for our customers. So a very positive response. And we have been speaking to all these customers personally, being in touch with them and trying to understand them. I mean every electric car that we've sold is a story by itself. Every customer has given us some story on why they moved towards electric cars, and they’re all amazingly positive things. I think one of the stories which I can share is that many of our customers have bought these cars because of their kids. They almost, let's say, force them to buy electric cars. The kids are coming saying that “Yes dad, our next car is going to be electric”. And of course, the knowledge of our customers about what is available globally and they want to switch to the latest technology has really astonished us. And of course, most of the customers who have bought our cars, they're charging them all at home. So, you know, there's a perception of insufficient charging infrastructure with a 300 to 400km range for one full charge. It's been really a positive story. Customers are really happy. And I'm sure in the times to come, we will do much better.
AM: Supply chain issues. Have you all been facing them or have you all been able to meet demand?
BD: So no doubt, there have been some challenges that we continue to face, but it is a developing story we're trying to get support from headquarters. So far they've been really helping us well. But yes, there are some times – for example, if the demand is more, we are requesting for more electric cars, more Q5s – it's not easy for them to also provide more. So definitely, I would say demand is much more than the supply today. If we can get more cars, we can sell more cars, but unfortunately, this remains to be an issue. I'm hoping that in the next couple of months slowly, but surely it will be improving.
AM: RS cars. Are they still on the cards for India, or is it now going to be electric?
BD: No, we have three RS cars in India, the RS 5, RS 7 and RS Q8. And we will continue to sell them well in future, but at the same time, we also want to give a choice to our customers to also offer them an electric RS. And that's what we are doing. So everything is for the customers, the choice for the customers.
AM: Going forward, can we expect more RS launches?
BD: Anything that makes a positive business case, yes. The answer is yes. A conscious call always, because every car that we launch, we have to serve the car for the rest of its life. So from that point of view, it has to make a certain minimum volume and a positive business case, but we are always willing. And it's easy. You know, the FBU strategy is relatively easy because you don't need immediate investment in the country. Of course, it still remains to be a limited portfolio, but it's easy. I mean, at this point in time, I would really appreciate the government and the kind of policies that we have. It's easy now to do that part of the business.
AM: AMG and BMW have started local assembly for their performance cars, like BMW M. Is Audi looking at local assembly for its performance cars?
BD: At this point in time, I would say our focus still remains to be FBU, because there is where we are able to offer customisation to our customers. So our focus will remain that when we are selling high-end cars, RS models, and the cars above 1 crore rupees, we are still giving options for customers to define their own cars. So that is what I think and our priorities still remain on that side.
AM: You have plans to sell a lot of EVs in the future. In the far future, do you see EV assembly happening in India?
BD: We definitely are looking at every possibility. But as I mentioned, we need the minimum threshold volume to convince ourselves and later on our headquarters that these kinds of volumes can be achieved in electric mobility. We've just started. It's been just less than six months and so far the response is very positive, but it is still not enough to make a decision that we start making these cars in India. We need a minimum threshold volume. Once we reach there, we'll be able to convince our headquarters to invest further in India. So I think it's a question which is still on the table. No decisions taken. Looking at things very positively.
AM: What is the current number of service touchpoints you have and how are you planning to increase?
BD: We have 40 touchpoints. I think by end of this year, we will reach 41 and that was our challenge, to reach 41. We'll continue to evaluate if we need to further reach closer to our customers, there is never a no. Especially on the after-sales. We have this workshop first strategy, where we continue to evaluate and also Audi Approved Plus strategy where we continue to expand our network from seven to 14 this year. So I think this focus remains, there is no doubt about it. If we need to reach somewhere close to customers, we will reach.
AM: And what's the current dealer network at?
BD: By end of this year, we'll have 29 showrooms, 41 workshops and 14 Audi Approved Plus facilities across the country. I think we are represented in 37 cities.
AM: And what is the sentiment amongst dealers after the slow 2020? You've got nine new products this year!
BD: Very positive. I think from a dealer's point of view, one of our four strategy pillars is the network. And a network has two sides. One side is, how do we provide this network for our customers? That is the first priority for ease of ownership of Audis. On the other side, the network also needs to be sustainable. So the sustainable network for our partners – they have invested, they need it to be profitable. If they are profitable, they would invest back into the customer's ownership experience. So far it is very positive. I think the pandemic hit us hard, but it also taught us many lessons. How can we be more nimble, agile? How fast can we make changes in our business? All those things we have looked at, and we have pruned ourselves to make certain changes in our business and that's helping us to become more sustainable.