Audi is preparing a new plan for India built around a stronger product portfolio, greater local assembly and faster introduction of its global models, as the German luxury carmaker seeks to regain momentum in one of the world’s most promising automotive markets.
Global CEO Gernot Dollner said India is becoming increasingly important to Audi, and the company is now working towards the right product and operating structure for the market. “We will see a substantial portfolio, but it has to be focused to be able to be successful in India,” Dollner told Autocar India in an exclusive interview. “Every successful strategy starts with products. Without products, it does not make sense.”
Audi’s renewal plan with focus on new products
The renewal will begin with the new-generation Q3 in the fourth quarter of 2026, followed by the A5 in the first half of 2027. The Q9 flagship SUV is also being evaluated for India, with work underway to assemble it locally. These three models could reach the market within around twelve months. Audi also plans to reduce the delay between global and Indian launches, which has left parts of its local range out of step with competitors in recent years.
The carmaker is targeting a doubling of its share of India’s luxury car market from around 8-9 percent to 18-20 percent over the next three to five years.
“India is an increasingly important market, and we have to be honest. We have been struggling to find the right setup in that market,” Dollner said. “I hope that we now, with the decisions that we have taken over the past years, are able to step by step find our position in the market. Trade agreements will help in the future, but we still have to clean up some things that we did wrong in the past.”
Audi sees the long-term potential but is still working out the volumes and cost structure needed to make the business viable. “We somehow still have not found the right complete volume and setup and business case behind that for the brand,” said Dollner.
Local assembly is only step one
Greater local content will be necessary for Audi to compete in India, where import duties and adverse currency movements have pushed up prices. “You will be only in the game if you have local content and you follow these rules that are implemented. That’s what we have to do,” Dollner said.
Locally assembled models are expected to account for around 90-95 percent of Audi’s future India business, Autocar India has learnt. Fully imported vehicles will largely be restricted to niche and brand-shaping models.
Audi currently assembles its core models at the Skoda Auto Volkswagen India facility in Chhatrapati Sambhajinagar. The 2.0-litre EA888 petrol engine used across much of the range is also assembled in India. The company is working on the local assembly case for the Q9 and studying what would be required to assemble its 3.0-litre engine in India.
The Q9 will sit above the Q7, adding a new flagship to Audi’s India portfolio. It has been developed with greater emphasis on rear-seat occupants and is expected to offer different seating configurations – an important consideration in India’s chauffeur-driven luxury segment. Deep component sourcing will take longer. The relatively small volumes generated by individual luxury models make it difficult to create a viable domestic supplier base for every part. Audi will widen local assembly first and increase local content where volumes support it.
New-generation models are becoming more expensive because of additional technology and regulatory requirements. The stronger euro has compounded that increase by raising the cost of imported vehicles and parts.
“The very strong euro compared to the dollar and other currencies is really hitting us badly, especially in markets like India where, due to the big competition, the margins are quite critical,” Dollner said.
Audi does not plan to counter the cost increase by offering stripped-down variants. Its sales data over the past five years shows that Indian luxury-car buyers favour better-equipped versions. The top variants account for around 55 percent of sales, the middle variants for 35 percent and the entry-level ones for just 10 percent.
The new Q3 and A5 will therefore be positioned competitively, but pricing alone will not be Audi’s play. The company believes buyers will pay for the latest technology and features if the product delivers enough value.
India-EU FTA opens the door for niche imports
The India-EU free trade agreement, expected within nine to twelve months, adds a second lever. Lower duties open the door to niche imports, what Audi India head Balbir Singh Dhillon calls “brand shapers” and “the cherry on the cake.” This could lift CBUs from 5 percent of the mix to perhaps 10. The RS5 is under consideration, though as a plug-in hybrid it sits in a regulatory grey zone: nobody yet knows whether PHEVs will qualify for concessional duties. Pure-ICE bruisers like the RS Q8 face no such ambiguity.
The India-EU FTA could allow Audi to introduce more niche and high-performance models. Imports, however, will remain a small part of the business, with locally assembled models continuing to drive volumes.
Even with a wider locally assembled range, Döllner expects profitability to remain challenging. “Even with the local content, the margin situation in India is not fun,” he said.
Dipan Sur
Viraaj Bhatnagar
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