India has the biggest long-term potential: Luca de Meo, Audi AG

German luxury carmaker Audi AG is betting on India’s rapidly growing working population to drive its annual global sales to 2 million by 2020. The company , which last year nudged BMW from the No 1 spot in the luxury car market, says India offers it the biggest long-term potential on the planet. Audi’s board member and in-charge of global sales and marketing, Luca de Meo, tells ET’s Chanchal Pal Chauhan how the company plans to unlock the luxury potential of one of the youngest customers in the world. Edited excerpts:
Audi became the market leader in India in 2013, two years ahead of the target. What is your strategy to maintain this position and continue the sales traction?

India is a market with the biggest long-term potential on the planet. It has the biggest working population on the planet, with the average working age of 25 years. Becoming the market leader has been a surprisingly positive development for us.

Our first target was to get there, and the second is to maintain this leadership with innovative market strategies and new products. The global markets are witnessing a trend towards compact cars. Even in a developed market like the US, customers are increasingly going for compact sedans .

We not only think about the competition of luxury brands but also customers upgrading from premium or volume brands. We have A3 sedan lined up for India by this summer. Already our compact sports utility vehicle Audi Q3 is successful globally . It has posted strong sales in two years of its existence in India.

Luxury carmakers have been frequently hit by the changing taxation structure. How do you plan to neutralise that for the customers, especially ahead of the elections?

Some clarity and long-term policy helps us plan for the future and make the right choice. Hope that after the elections, the situation goes in that direction with regard to rules and monitory regulation with a stable government helping us take positive decisions for solid long term business in the Indian market.

Audi entered India in 2007, and has been positive all through, except in 2013 and 2014 when there were few months of negative sales. Is brand Audi showing signs of fatigue?

We don’t track the market on a periodic basis. We have a long-term perspective. We are the first luxury carmaker to reach the 10,000 vehicles sales threshold in India.

We would introduce new products like the A3. We have expanded our network rapidly. We want to maintain profitable business for our dealers in the changing environment, despite an unfavourable environment like fluctuating currency exchange rate.

We are keen on profitable business and it is a condition to a long-term successful existence . We don’t grow for the sake of growth, but achieve some real long-term targets.

What potential do you see for Audi in the Indian luxury car market?

We are the market leader but 10,000 cars a year in a country of a billion people is a very small proportion . The sales are bound to grow. We are here for long innings and would unleash the potential of the market with several new initiatives.

By 2018, $22 billion will flow into new models, innovations and production network. Audi intends to expand products to 60 models from 49 and many would flow in the Indian market. It would have an important place in our aim to clock two million sales by 2020.

Producing locally helps to rein in costs. Is Audi planning an independent plant for the growing Indian market?

We are bringing in the A3 sedan in parts and component setup. We used to have fully-built vehicles imported earlier and then go for local production.

But for the first time, with the A3, we are going for a fully locally-assembled car as a first step to control costs and give price preposition to our customers. New plants are coming up in Brazil, Hungary and Mexico, but no plans for India at the moment.