Audi India Predicts Drop in Sales Thanks to GST Cess

The recent GST cess would impact price-sensitive first-time luxury car buyers, according to the carmaker.

Audi India will be sizably impacted by the new, additional GST cess, and the company fears it will affect sales going forward, especially for first time buyers. The carmaker’s sales figures saw a drop in volume to 7,800 cars in 2016 from 11,192 cars in 2015.

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.”

Currently, Audi’s network includes 41 service points, 40 showrooms and nine Audi Approved Plus (pre-owned Audi certified car) showrooms. The company intended to increase its base to 100 touch points by end of this year, but now, with the recent additional GST cess levied, the company is putting the brakes on its expansion and may approach our market with more caution.

Ansari added, “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.”

At the launch of its flagship seven-seater SUV, the Q7, Ansari had 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 company might delay its plans to introduce their EV offerings in India due to the lack of adequate infrastructure.