In conversation with Head of Audi India Balbir Singh Dhillon
The big news from Audi India is come April 2020 they will have no diesel engines. The entire Audi India range will transition to petrols and the new products like A6 and upcoming Q8 will only get petrol engines. In this first and exclusive interview with Balbir Singh Dhillon, the new head of Audi India, we talk about the new launches starting with the Q8 and then the A8, the challenges of the luxury car business, electric vehicles like the E-Tron, profitability of Audi India dealers, and whether now is the best time to buy a car.
Sirish Chandran –What is your 2020 looking like?
“Audi’s India plans already started a few weeks back when we launched the new A6. That’s the first entry into the new era with the BS6 cars in India and of course all the cars that we are going to launch henceforth will be BS6. Not only BS6 in terms of the engines, but also new technology, new looks and all that comes with that.”
SC – The new Q3?
BSD –“Well let’s keep some secrets for the time being.”
SC – And the E-Tron?BSD – “Of course, that is also on the cards. Which month, we’re just holding that information with us, we will let you know very, very soon.”
SC – What about diesels?
BSD –“Goes without saying, India is a diesel market but of course it is a changing market. There was a time when all these cars we were selling almost 97 per cent diesel, but off late there is a shift towards petrol also. What we sell in totality is almost 30-35 per cent petrol but at this point we are launching the petrol BS-6. There definitely will be some customers who still want a diesel and they won’t have that for some time. That said, have we given up diesel? Answer is no. We are still evaluating, it is part of our portfolio which is on the table, but we are holding on to it. I just want to keep the complexity low when we are bringing all the BS6 cars. If we are able to bring the diesel we will look into it. For the time being, we move with petrol.“What happens to those customers who are really, really diesel fans? We will bring in certain programs on our petrol cars and we will make a compelling program for these customers that they also experience our petrol cars. Petrol is no way behind diesel, these are perceptions in our frame of mind. We have been running diesels for multiple years and those perceptions need to be broken by all of us. I think this is also part of our job.”
SC – How far are electric vehicles?
BSD –“This is one of the topics which is very dear to me, also being driven by the government so we will also participate in it for sure. Is going to happen overnight? The answer is no, because infrastructure is one of the key things that needs to be available. I want to be very, very careful when we launch these cars, because they have to be successful. We don’t want to we bring in cars and after sometime we are thinking whether we made the right decision or not. I want to be extremely careful, we are definitely going to get these cars, but for example, if the car has a range of 350km but will it be good enough or not good enough, we don’t know yet. We need to understand our customers so we will do some customer studies, especially in the metropolitan cities and look at what are their needs. Are their needs inter-city or most of their needs are intra-city? I also understand most of our customers who will buy these cars, this will not be the only car they have. This could be third or fourth car so when they go from one city to another it could be in a different car and when they go within the city it is going to be a different one. There are definitely a lot of customers who want to be the first movers. This is what we’re looking towards.
SC – How will you get buyers for the Q8?
BSD – "You know me from the past, we’ve also worked in conditions where we were selling very exclusive cars. This is also a very exclusive car. This is not a mass car, this will be kind of a customised car. Every customer can design their own car. For example, 54 exterior colours, 9 interior colours, multiple options you can choose from. Every car is going to be unique, this is one of the parameters also, it will be very exclusive. This car is not meant to be driven in but to drive, the focus of this car is to drive. So people who are successful, people who have arrived in their lives and also love to drive, this car is meant for them. Exclusivity is the word to go for this car.”
SC – This is not going to be an Urus fighter right?BSD – “This is also of a secret I wish to keep with myself but it’s not a secret anymore. We’ve already revealed the RS Q8 and that is also one of the topics we have on the table. We are yet to make a decision, which way to go. I already see a lot of enthusiasm among journalists like you, who have been reading about this and also a few customers who also want us to bring these cars but we are contemplating on that.”
SC – What’s going on with the RS cars?BSD – “Just wait and watch, that’s all I can say!”
SC – You’re not going to give up on sportscars?
BSD – “No, not at all.”
SC – What are you focusing your energies on?
BSD – “Going forward, we need to focus on sustainability. Sustainability, profitability for the partners is very important. Discounting is something which we need to re-look at because eventually it impacts the resale value of the car. So whatever profitability that we draw by selling cars, we also reinvest into the customers. One of the key challenges I have is how to change the perception. What we will do going forward is, offer a lot of value to the customer because you need a customer who should feel trouble free for 5, 7, 10 years before he sells the car and then for the next person who buys the car. We are also focusing a lot on pre-owned car programs, that is already my target and I will be even more pushy with it. The whole life-cycle, the ownership experience of the customer is the key, that is what me and my team will focus on.”
SC – What are you doing on the digital front?
BSD – “We have around 75,000+ cars across the country. In the digital world, that is the wealth that we own. We have been developing strategy 2025 for last couple of months. I must also thank my predecessor who also initiated this program. Key for us is also to not just look at being a car company but a service provider over time. This is the digital way to go, I think as we move forward, this is the wealth that we will cater to. We will bring a lot of digital initiatives in the times to come and we will also use this experience of digital sales and marketing, which we also don’t do at present.”
SC – Do people want to share their cars?
BSD – “At this point in time, very honestly, answer is no. Will it remain the same? Answer is again no. You and me for example, it is very difficult for me to give my car to somebody else, but we are also an ageing population. There is also a lot of youth that is coming in too, which I believe would be okay to share. We have to respect that and also work towards it. We are keeping eyes and ears open and keep on interacting with a lot of customers. People will change and so will we.
SC – Do you see scope for a small hatchback?
BSD – “This is a very tricky question, it has been tried already and if we do this we will not be the first one. It has not yet worked for India, primarily because of the pricing. If you want cheap pricing, it’s a big compromise which cannot be done, so we have to be very careful. You know we have Q2 also which falls into a similar category but at the same time getting that car into India at a price which the customer expects is not that easy. Sometimes also to keep things simple, you have a Q3 maybe you have 3 variants and you try to catch that segment that you otherwise want to catch with Q2.”
SC – The Q3 with the manual transmission, did that work?
BSD – “I would say it worked when we got the car, but did not continue because it was a very small percentage. To keep everything simple, we eventually let it go."
SC – How difficult has the business been in recent times?
BSD – “It's not been easy for the last couple of years, also because of the overall industry as well. If you look at just the segment we are in, which is the luxury segment, it has remained 30-40,000 in the last 6 years and continued to be so. All of us in the industry imagined that this would have grown to 100,000 cars by now but it has not happened. What has happened is that all of us are in the same segment trying to eat the market share from each other. I personally believe that we are on the cusp of multiplying this at some point in time, when this will happen, I don’t know. Within 1, 2 or 3 years, this industry will double at least. Taxation is also a very important factor in this, if you see today in luxury segment you have 22 per cent cess. The Government put the cess for 5 years to compensate the state government for the loss of GST. I’m sure after 5 years this 22 per cent will go and I hope it goes. That helps us to reduce car prices because that 22 per cent is a large amount. That also has a ripple impact on the registration cost, so if you are able to bring down the cost by say, 10-15 per cent, you can stretch the volume by double the percentage. 10 per cent decrease in price gives you a 20 per cent increase in volume, that’s how it is. Anything that gives us one opportunity, we are able to look at higher volumes.”
SC – Is this the best time to buy a car?
BSD – “Personally speaking, I think this would be the best time to buy but then it depends on what is your need because I think more or less everybody is over with the [BS-4] stocks they had left so this could be the best time to buy.”