Audi India sees flat sales in 2018 following duty hike

Luxury carmaker Audi India, which had looked at a double-digit growth this year, is now expecting that sales will be flat in 2018, following an increase in cess and hike of customs duty on some imported auto components announced in the Union Budget, an official said here on Friday.

"Initially, we are planning for a double-digit growth in 2018 and now we are expecting a flat year for several reasons. Cess increase in September last year and customs duty hike as announced in the budget were not favourable steps for us though introduction of GST (Goods and Services Tax) was a great move," said Rahil Ansari, head of Audi India.

"However, we have measures in place to not have a flat year," he added.

The German carmaker's 95 per cent volume comes from cars that are assembled in India and it has invested substantially in the past years in the country and will keep on investing as it believes that India remains "a strategic market", he said.

Audi India sold 7,876 units in 2017, a growth of two per cent over sales of previous year.

On duty hike and cess increase, he said: "These were not favourable developments for the luxury segments. The recent changes (hike in cess and customs duty) within such a short span of time are not favourable for long term planning. We need more consistency in terms of policies."

"We are assembling models like A3, A4, A6 (Sedans) and SUVs models of Q3, Q5 and Q7. These models account 95 per cent of our volume," Ansari said, adding that the company wants to achieve profitable growth.

According to him, the carmaker has requested the government to implement more favourable policies and has been in touch with them for a relook at the recent customs hike.

"We do expect some revisions," Ansari said, adding that about a 10 per cent dip in taxation could lead to a 25 per cent sales growth in the luxury car market in India.

The carmaker is also looking at expanding its portfolio in A and Q range including "the entry level" in India to make luxury cars more affordable, he said.

It may consider introducing the hatchback cars in its portfolio in the next two-three years as customers' perceptions have been changing, Ansari said.

The carmaker has increased prices of its cars by an average of 3.8 per cent from this month after the customs duty hike, he said.

On electric vehicles (EVs), Ansari said: "We would be in a position to launch electric vehicles in India by latest 2020. Globally, Audi will launch three EVs by 2020. Electric vehicle is the future but we see how the development in terms of infrastructure will happen."