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Old 9th March 2011, 14:37   #31
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

Its quite a sensitive situations. It is no doubt unfair to them as well, as this comes as a big blow and more so, since they have a wide portion of these entry level cars that are getting sold in high numbers. Also bad for buyers, as their now within reach dream, is going to get set back a bit.

In one way, it should not just be Audi, but a collective stance by all luxury car manufacturers. If they want to leave some impact

As for bullying the government, I feel this may backfire and their claim rebuted, as I dont think these kind of tactics will shake them. As someone pointed out here, what will happen to all the Audi owners here. Are they going to sit back and take it lightly. There could be lawsuits that follow as well. I dont think it is that easy that you just shut shop and leave. India is one of the most important countires in terms of the revenue pie for a lot of these companies, and they will not want to do something drastic but should find a way to negotiate and obviously, the government should also take a compromise
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Old 9th March 2011, 14:48   #32
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

So, is Audi threatening the GOI?, with what? - that your exit will cause loss of lacs of jobs to the INdian nation?, loss of several crores in revenue?, or that Audi's exit will cause loss of face?
If you want to go, please also exit with all your sister companies. And lets see who's loss it is - the state, the people or the corporation...
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Old 9th March 2011, 16:22   #33
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

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Originally Posted by .anshuman View Post
The popular perception is anyone buying a BMW, Audi, Merc or Jaguar will have endless money stashed in the banks, so it does not matter at all.
This is the crux of the matter. This budget proposal is mostly aimed to milk from folks who has discretionary money to spend 40-50-80 Lakhs, since cost of the duty will be transferred to the customer almost immediately.


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Originally Posted by .anshuman View Post
There are petrolheads who work hard just to be able to afford a bimmer or a Merc.
How many people really think for such a group?

Will Audi leave? We dont know yet. No company worth its salt can afford to miss the Indian Market. However from this move, will the sales really drop? I doubt. The discretionary money is pretty powerful. Will an A6 or 5 series or S class or a Landcruiser customer shy away from a purchase if the cost goes up by 10% or 20%? I think more the cost it is better for many customers.
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Old 9th March 2011, 16:35   #34
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

If the custom duty announced by the Govt. is actually implemented, it will set the boom India is seeing w.r.t. retail, cars etc. back by a few years.

As amitoj said, today Audi is "considering" this among other alternatives, the next day, some other manufacturer could.

All said and done, however I wonder if anyone would want to take an extreme step of quitting altogether. India is, rather has emerged as a terrificly fast growing market for durables, cars, electronics etc. so to quit India now would mean one huge market gone.

But then again, I doubt how feasible it is for Audi/BMW to set up manufacturing in India. Simple question - How many are fine with a Audi/BMW manufactured in India?

For the growth India targets, the Govt. needs to generate revenue and the manufacturers cannot pay that amount of tax. So, none can/should completely have their way.

Guess the best way is for there to be a negotiation on the amount and specifics of the tax.

Last edited by libranof1987 : 9th March 2011 at 16:38.
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Old 9th March 2011, 16:36   #35
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

Somehow this move / comment by Audi does not impress or get me worked up.

I really appreciate the Ind Govt. stand on the CKD manufacturing, and feel that this will further boost manufacturing in India, and help in the long run.

It may in the short run increase the price of cars from the 3 Germans and the 2 Japs (who will definitely finally get down to manufacturing totally locally as it is a bit market for them).

If any of the 3 Germans do get down to manufacturing locally (as per the GOI definition) they would garner the complete market share of the 3 put together and more as the cost of production itself would go down.

On a more realistic note, don't think that Audi is going anywhere (as in pulling out.) Hope GOI does not back down.
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Old 9th March 2011, 17:06   #36
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

Can't Audi manufacture cars in the plants of VW & Skoda? They are all under VW umbrella, right? It will also make sure that cost will come down drastically. They can import engine & other things can be done here. This way they can compete more with BMW & Merc. May be i am wrong
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Old 9th March 2011, 17:18   #37
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

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Originally Posted by dot View Post
Will an A6 or 5 series or S class or a Landcruiser customer shy away from a purchase if the cost goes up by 10% or 20%? I think more the cost it is better for many customers.
Aren't those already being imported as CBU's? If yes, then I don't think this would affect them at all. Of course, to maintain the divide between say a 3-series and a 5-series, BMW might up the price of the 5-series.
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Old 9th March 2011, 18:11   #38
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

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Originally Posted by ACM View Post
I really appreciate the Ind Govt. stand on the CKD manufacturing, and feel that this will further boost manufacturing in India, and help in the long run.

On a more realistic note, don't think that Audi is going anywhere (as in pulling out.) Hope GOI does not back down.
To me the issue is not if GOI's stand of boosting manufacturing by imposing more duty on imports is right or wrong - though I am not fully sure it's right. The issue is the sudden and large hike by changing definition of CKD to exclude pre-assembled engine or gearbox or transmission thereby increasing duties by 6 times. SIAM said it did not expect it at all. Such sudden large impact moves make it difficult to make stable plans especially if it hits the industry unevenly. We have all drawn up project plans and have had to deal with a multitude of market uncertainties to make it give even a decent return on investments. Policy uncertainties make it worse and can hit some very badly while benefiting someone else, making it patently unfair.

On boosting manufacturing via incentives / disincentives I am drawn to our experience in the Ship Building industry where subsidies were given to boost ship building and Govt shipping companies were forced to buy from Indian ship builders. Even after 3 - 4 decades of such incentives; despite having all the strengths of cheap labor, low conversion costs, FX advantages, the industry is nowhere; and quite a few went bankrupt. In the process the user industry, i.e shipping industry fleet growth was terribly hampered and did not grow anywhere in proportion to our growth in world trade. I am going off topic just to draw an experience of how policy based incentives / disincentives may not always work to the desired end and in fact may work otherwise.

Cheers,

Last edited by diffsoft : 9th March 2011 at 18:14.
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Old 9th March 2011, 19:04   #39
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

I haven't read the entire thread yet, but to all the people saying Audi will not leave because they will lose face cause the customers will have no where to take their cars for servicing etc. I have 2 points
  1. They have their sister companies to take care of servicing. Placing a few Audi specialist mechanics etc in VW and Skoda A.S.S.C. is hardly a problem.
  2. They can function like Opel is functioning in India, they do not sell new cars, but still provide spares etc.
But then again, Opel operates out of the GM stable IE Chevy in India. So it is a working model/demonstration of how Audi could function. So I suppose if they want to leave, they most certainly can without losing face.

On the other hand they can reduce their expenditure by combining showrooms and A.S.S. centers and making it more cost effective and carry on business as usual.

OR they can extensively invest in India and use it as a manufacturing unit and use India's cheap labour to their advantage.
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Old 9th March 2011, 19:18   #40
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

Maybe as Auto enthusiasts we are unhappy with the new policy.
But look at the bigger picture.
In the long run we have to MAKE sure that we are the HUB of car manufacturing in Asia.
Just like electronics wave,waiting for chinese cars to enter the market,eh?
Already the Rio is here and the Chinese swallowed GM india.
Am a fan of free market and all, but we are a large proper country. Not some small Singapore or Dubai,and we have to have some strategic interest.
BTW, @sgiitk, we can surely hope for Merc/BMW in that segment but sadly both with their MFA and FF platform respectively.
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Old 9th March 2011, 20:06   #41
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

Oh no, poor little rich german brands facing high duties. About time something happened to shake things up. The duties for the ckd come to around 60 per cent? So what costs 15 lakh in the US (cheapest 3 series, also assuming us duty levels to be zero) should cost 24 lakh here. Which it does. Except for the fact that in the us this is a 3 liter engine, here it is a 2 liter one. Margins, margins!
If this forces these manufacturers to set up full fledged assembly / manufacturing plants here then it has to be a good thing. Whether it'll actually lead to reduction in prices is debatable, but hey, if it leads to new jobs in our country then it is great, right?
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Old 9th March 2011, 20:21   #42
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

Quote:
Originally Posted by diffsoft View Post
On boosting manufacturing via incentives / disincentives I am drawn to our experience in the Ship Building industry where subsidies were given to boost ship building and Govt shipping companies were forced to buy from Indian ship builders. Even after 3 - 4 decades of such incentives; despite having all the strengths of cheap labor, low conversion costs, FX advantages, the industry is nowhere; and quite a few went bankrupt. In the process the user industry, i.e shipping industry fleet growth was terribly hampered and did not grow anywhere in proportion to our growth in world trade.
Cheers,
I think the difference today is that 3-4 decades ago, almost everyone chose to ignore India. Today they can't. If our economy continues to grow the way it is even for a decade, monthly numbers of the these German autos might well be close to yearly numbers today (if not more). For that they need to stay. Even if one of the luxury brands sets up a bigger base here, rest will have to follow suit or say good-bye.
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Old 9th March 2011, 20:39   #43
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

Not a bright idea. Not only will it bring disrepute to the company which is slowly building its market in the country. But its sure to hit the employment sector of the Country too. India needs Audi for the revenue and Audi needs India for the sales. One can't forego the other. But from what I read in the papers, a 8L hike for anything is substantial. Regardless of whether your buying an Alto or an A8. My suggestion: Indian Govt. should rollback the Tax Reforms which don't affect the aam aadmi, but adversely affect the Upper Class of society.
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Old 9th March 2011, 21:20   #44
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

Quote:
Originally Posted by mayjay View Post
Oh no, poor little rich german brands facing high duties. About time something happened to shake things up. The duties for the ckd come to around 60 per cent? So what costs 15 lakh in the US (cheapest 3 series, also assuming us duty levels to be zero) should cost 24 lakh here. Which it does. Except for the fact that in the us this is a 3 liter engine, here it is a 2 liter one. Margins, margins!
If this forces these manufacturers to set up full fledged assembly / manufacturing plants here then it has to be a good thing. Whether it'll actually lead to reduction in prices is debatable, but hey, if it leads to new jobs in our country then it is great, right?
No thats not true,that car costs 15 lakhs in US cost 24 lakhs here because of the earlier CKD rules of 60%.Now they intend to hike it by another 60% so that 24 lakh car will cost 38 lakhs!

I still believe its a nonsensical decision by the government.If they intend to try and turn india into an export hub,this is not going to work.

If you jack up prices of the cars in the premium segment,its sales will take a hit because this segment is no longer immune to rise in prices.There are many people who are migrating to the entry level at the age group of 30-35 who are driving the bulk of the sales and wont be able to bear the increased cost.

So if sales decrease why would any manufacturer want to build and expensive assembly plant?Just for 5000 cars a year.

We can say a high level of localization can be a viable business proposition only IF sales is higher than say 2000 cars a month of a single model.That would mean 25,000 cars a year.Audi is yet to reach that.

Nissan can manage to make the micra here because it also exports a large amount.So is the same with FIAT,because they share the plant with Tata which makes the Manza,so they have scale.

Also interestingly Audi has been having record sales all over the world recently and though the developed markets have low growth,they still have strong premium car sales.Also they have a huge operation in china.India contributes only about .5 % to audi sales.

Last edited by avishar : 9th March 2011 at 21:21.
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Old 9th March 2011, 22:39   #45
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Default Re: Audi planning to exit India in the backdrop of recent budget proposals

Well my question is here,
1. is the Indian government ready to establish Free trade agreements with the European countries for car exports.
2. Is the Indian government ready to provide infrastructure such that a manufacturer setting up facility in India can easily take the car-containers to his shipping yard and from there export the vehicles.
3. Do they have guts to guarantee a customer base to enable atleast 5K sales per month to these vehicles.

Unless the govt's answer for the above question is true. I say heck you have no rights to ask someone to clean his room, when you are stinking.

Its just like saying dont set up small shops in a sparsely populated village. And forcing them to either open shopping malls or close the small shop.

We are at a stage where govt assumes they can command these companies, but its actually just the starting stage, if you try to take them on, you will be the looser.

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Originally Posted by TOR View Post

The government should stand by the decision on the import duties. If these companies are really serious about their 'India commitment' then they should set up factories for local manufacture of the cars they want to sell here.
Quote:
Originally Posted by ACM View Post
I really appreciate the Ind Govt. stand on the CKD manufacturing, and feel that this will further boost manufacturing in India, and help in the long run.
For those appreciating govt move, brace yourself to buy Ambassadors again. All the best.
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