Audi India expects drop in sales due to GST cess
6th Sep 2017 9:30 am
German carmaker says GST cess would impact price-sensitive first-time luxury car buyers; slows network expansion plans due to likely drop in sales.
Audi India is among the luxury carmakers that will be sizably impacted by the new, additional GST cess. According to the company, it was hopeful that the original GST tax introduced on July 1, 2017, would help accelerate their sales – which had seen a drop in volume to 7,800 cars in 2016 from 11,192 cars in 2015 – but now the new, additional cess will have an adverse impact.
The company expects the cess to impact its sales volumes in double digit. Rahil Ansari, head of Audi India, said, “Customers of luxury cars are price-sensitive too. Audi A3 and Q3 buyers are mostly the first-time luxury car buyers; they are price-sensitive and a difference of few lakh rupees is not something they will be really comfortable with. The Indian luxury car market is no longer an emerging one. It is a matured market.”
Slowing network expansion plans
The company has an existing network of 41 service points, 40 showrooms and nine Audi Approved Plus (pre-owned Audi certified car) showrooms. The company had earlier planned to increase the total to 100 touch points by end of this year. But with the recent announcement of the new, additional GST cess, the company is putting brakes on its ambitious expansion and has planned to reach 95 touch points in the year.
Speaking to our sister publication, Autocar Professional, Ansari commented on the business plans for India, “We will see the impact and then decide our course of plan. We will not react prematurely. Because of the impact we will definitely need to adjust business plans. But as of now, it is too early to comment.”
Delaying alternative-fuel offerings in India
The company whose line-up consisted 90 percent diesel-powered cars and 10 percent petrol-powered ones three years back, has improved this ratio to 70 percent diesel and 30 percent petrol. As per Audi’s global strategy, by the year 2020, it is aiming to improve this ratio to 50 percent diesel and 50 percent petrol or alternative fuel technology. Speaking at the launch of its flagship seven-seater SUV, the Q7, Rahil Ansari said “We have improved the mix in our product offerings (diesel and petrol). By 2020 we will have 50 percent diesel-powered cars and 50 percent petrol or alternate fuel-based cars. We are optimistic towards India’s goal for having a fleet of all electric vehicles by 2030. We haven’t seen any clear roadmap that would enable introduction of EVs feasible. But till the necessary infrastructure for EVs is not present, wherein our customer can travel anywhere in the country with access to charging stations, we do not foresee introduction of our EV in India.”
The German carmaker is said to launch its first EV by 2020, but sighting the examples of non-availability of charging stations and infrastructure that would create a market for the cleaner vehicles, the company might delay its plans to introduce their offering to the Indian customer.
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