Audi India Head Balbir Singh Dhillon on Growth, New Models and Luxury Car Market Challenges

With the launch of new products, we intend to grow our sales and double our market share to 16% in the next 3–5 years.

There are three things we intend to focus on. The first is products. At the end of the day, we are a car company, and we need to launch more products. We have announced three products for now. We just launched the new Q3. This will be followed by the Audi A5 in the first half of next year, and then the Audi Q9, which recently debuted in the US.

The second focus is on expanding our network. We intend to increase our number of showrooms from 28 at present to 40 by next year and more than 50 by 2030. We intend to expand not only into Tier-II and -III towns but also deepen our presence in some Tier-I towns.

The third focus is customer centricity. We are renovating our showrooms across the country under a new global ‘progressive showroom’ concept that we have brought to India. We are also improving the processes at our dealerships to give customers a better experience.

This year may remain relatively flat for us, not because of demand but primarily because of supply constraints. From next year onwards, we intend to increase our volumes and expect high double-digit growth.

Some time ago, we were predicting that the market would reach 50% electrification by 2030. That has not happened.

I think we all failed in our assessment that the market would move very quickly towards electric vehicles [EVs].

In the volume segment, EV penetration is about 6–6.5%, while in the luxury space it is about 15%. The industry is moving in that direction, but the movement has not been as fast as expected. Lately, there has been a lot of push from the government as well. I think there will be a lot of push going forward.

At a very conservative estimate, by the end of this decade, in 2030, we could be moving towards 25% electrification.

We will also gradually move in that direction because to be relevant in India, we have to have the right price points for electric cars. That can happen either if import duties come down over time under the India-EU FTA [free trade agreement] or if we manufacture or assemble cars locally.

Most of the cars we sell in India, upwards of 90%, are locally assembled, not manufactured. We import parts and components, assemble the cars and then sell them. Some components are localised, but most are still imported.

This year, the industry will sell approximately 58,000 cars. When you divide that across the various models and variants available, the average works out to fewer than 1,000 cars per variant. Deep localisation requires significant volumes. Luxury cars remain a niche market, with limited volumes, which restricts the potential for localisation.

That is not a problem. If we plan well, we are able to get whatever we need. Supply is not a challenge.

Obviously, with disruptions, a couple of things can happen. If there is a war somewhere, most of our material comes by ship. If ships are displaced or have to follow longer routes, there is a one-time disruption, but supply chains continue. In some cases, we may have to fly those material in, which increases costs.

The second factor is the depreciation of the rupee against the euro. That directly affects our pricing. Until 2024, the depreciation against the euro was in the range of 3–4% on a CAGR [compound annual growth rate] basis over the previous 5–6 years. But last year, the rupee depreciated 19% against the euro.

From January 1, 2025, to now, the depreciation has been 22%, creating massive pressure on the pricing of imports. We have no choice but to pass on some of that pressure. We try to absorb as much as we can, but it is not possible to absorb everything. That is why price increases in our segment are happening more frequently now.

So, these are the challenges. Otherwise, supply is not a challenge, and getting volumes is not a problem. It is a pricing issue.

It will help. We will be able to bring more cars into the country, although most of these are likely to be high-end cars because a large part of the cars we sell in India will continue to be made in India. To that extent, it will not be a volume channel, but it will definitely help in certain segments. We will be able to offer more cars to our customers.

The second thing is that we need to look at the FTA in terms of wealth creation. European markets opening up to us will help our exports grow and our MSMEs [micro, small and medium enterprises] do better business. But that will play out over the medium to long term.

For us, it is equally important, if not more so. The more wealth creation that happens in the country, the more customers will buy luxury cars. As more people become wealthy, luxury becomes part of their lives. So, the increase in our customer base through the FTA is another positive we see.