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-   -   Audi India to ramp up local production | CKD over CBU (https://www.team-bhp.com/forum/indian-car-scene/237977-audi-india-ramp-up-local-production-ckd-over-cbu.html)

Audi plans to ramp up manufacturing in India to make their cars more affordable.



According to Balbir Singh Dhillon, Head of Audi India, most of the cars that will be sold in India will be made locally. The company aims to achieve 80-85% localization. The move will help reduce the prices as the company will have to pay less duties.

Audi’s Indian product portfolio includes 8 models, out of which only two are manufactured locally. That’s the A4 and A6. Models like the Q2, Q8, RSQ8, RS 7 Sportback, S5 Sportback and A8L are imported as completely built units (CBU).

Being direct imports, these models attract high import duties. Compared to international prices, these cars are offered at more than double the price in India.

The luxury segment accounts for a mere 1% of the overall market in India. Carmakers blame heavy import duties for suppressing demand. Dhillon believes that there is huge potential for growth and if duties are lifted, the volumes would grow exponentially.

Source: Business Line

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Audi still has an opportunity to make a comeback. Audi still has the brand recall from few years ago and its SUVs - Q3 and Q7 still remain favorites. Just hope they bring in the diesels, especially for the SUVs.

This number seems unconventionally high for a luxury car brand when mainstream cars have 90% localization. I am missing something here?

I hope that the 2.0 TDi is also a part of their plan as without diesel powered vehicles, especially SUVs, they are not gonna see the volumes that they might be expecting.

Audi also needs to ramp up its marketing efforts. The A4 facelift and A6 launches have been very low key and not a lot of people are aware about these offerings.
The Q3 cannot come in any sooner and diesels are a must - at least on the larger Q5 and Q7.
I also suspect they have a lot of ground to cover on the dealer front - most of them must've been bleeding and on the verge of shutting shop.

Well said :thumbs up. The company has lost its way in the last 5 years (related discussion), but that's all down to mistakes made by Audi India, not Audi globally.

Going CKD is a no-brainer, but well, better late than never. Good to see Audi India finally waking up. They also need a strong product line up, proper pricing out of the box (Q2 pricing was rl:), wider range of engines (including a 4-cylinder diesel as well as a 6-cylinder), proper marketing push etc.

And please get rid of the habit of overpricing cars, then offering 10-lakh discounts. Mercedes might be all luxury + BMW driving pleasure, yet I think Audi can find a very safe "in between" spot. Their designs are to die for, the brand has lots of panache and their international product range is competent. My sister has two Audis in the house and she's super happy with her Q5. It's a top-class SUV.

They're also missing out on the Q3-Q7 range which used to be their bread and butter in India. The new gens/facelifts have launched a long time ago international, yet no sign of them in India. Hopefully they bring them here soon as CKDs.

Audi's handling of my case was one of the main reasons I did not go for the Audi S5. The car was great other than its drinking habit but service was a question mark and so were the spares. The S5 was a CBU and the SA gave me an estimated turn around time of a few weeks for small repairs.

Thus I resumed my fight for the Skoda Octavia RS :P

I somehow feel that this was a very random interview. How can a CKD car achieve 80% local content? Even if they plan to start using the 1.5 TSI and the DQ200 (which could get scale for local manufacturing if the Kushaq and Taigun turn out to be hits), don’t see that as a real possibility. And how many Audis will sell with the same engine / gearbox as a ₹19 lakh Kushaq?

The dynamics of CKD VS CBU have changed once the GOI started allowing cars without the need for homologation - even with 60% import duty (vs 15% on CKD a plus 30% on imported engines and gearboxes), there is a huge advantage in maintaining flexibility in what you produce. Frankly, CKD assembly of cars adds no value to India and to the manufacturer - it was ok in the 1990s when the Indian auto industry was just starting off, but with 3 mm units a year manufactured in India and rising, the GOI should allow more imports at lower duties so that the affluent can benefit from niche products at sensible prices. The GOI and state governments benefit in any case through GST / Surcharge / OTT.

EDIT: Just realised, that by 80% localisation, he may have been referring to 80% CKD assembly. Frankly that is neither here nor there.

Maybe this will give them some money to put into their design department.

Before y'all get your knives out, Audi's designs are subtle. While that can be elegant, it can't be that the entire line-up is the same design. Another thing to note - the Indian luxury car buyer is getting younger (total hearsay!) Audi's designs may be timeless but if they need to attract customers, especially younger ones, they better up their design quotient.

While the localization is a no-brainer and a welcome move, it is not going to solve Audi's India problems by itself. I feel the reasons why Audi is not selling well in India are deeper than simple CKD vs CBU strategy.

Just thinking aloud, let me think of A4 and A6. They are already CKD. But even these two models are not selling well (definitely not as well as Audi would have liked or not as well as what one would call them successful). And that means CKD by itself will not make cars sell.

I feel the problem is that Audi India has lost its USP. I can't recall what A4 offers that would attract me, at that price range. I am a big fan of the "real" Quattro (with Torsen system and full-time 50:50 Torque distribution) and that would be a big USP for me if that was available on A4. But that is not the case the last time I checked. A4 is just a FWD car.

Audi's apathy towards India runs deep. I just now visited their India website to double-check specs of the A4. And I happened to click on the "Equipment" tab. Guess what? They show an interior picture of a left hand drive car! I double checked again and the same is the case for A6 and even Q2. All left hand drive interiors shown in their configuration pages for Indian market! That is so shocking. If I were in charge of Audi India, I would have this changed to a right hand drive car instantly. Even in small companies we are constantly ensuring our website is accurate, and here we have Audi India not even bothering to put correct pictures on their official website for our market.

This example shows a lot that is wrong with Audi India. It is more than just CKD vs CBU.

Heard that the Q7 facelift and Q5 facelift launches are planned for July - August. Did not ask whether these would be CKD or CBU.

Bring the bread and butter SUVs Q3, Q5 and Q7 back, and don’t price them obnoxiously!

I don’t think the VAG group is bringing back diesels, so no point going back to this all the time. The entire lineup is going to be Petrol powered.

Anyways good Audi realised they needed to pull up their socks in the India market before they were thrown out of the market by BMW and Mercedes-Benz! Better now than never to ramp up CKD operations.

As per my dealer level sources, the early July launch will be the E-Tron followed by the facelifted Q5 and Q7 by September/ October (no idea which one will be launched first). The A3 is planned later this year, maybe December, and then finally next year, the Q3 in Feb 2022.

All these cars were supposed to launch in 2021 itself but due to the disastrous Second Wave of Covid-19 in India and the following lockdowns in different states of India, the whole Launch schedule got disturbed and subsequently postponed :sadface.

Also, No diesels (TDIs) planned to launch either. Audi might be going completely Electric and Petrol in India with its entire lineup.

I think there is some misinterpretation here.
In the interview he mentions, “local manufacturing of 80-85 per cent of the cars sold in India”. Which is to say that 80-85% of the units sold in India should be CKD, different from the localization level (i.e. the proportion of locally sourced content in a car).

With A4 and A6 already coming as CKD’s it probably leaves the Q models as the volume drivers that could further be assembled here.
I for one would want Audi to do well and again start offering competition to the other two Germans.
While I agree with GTO that they should get rid of the frankly bemusing discounting model, am not quite in favour of the approach adopted by Merc, which probably will likely result in low discounting on already inflated prices.

A one time correction in prices is merited. And though Mr. Dhillon has at least acknowledged the high pricing vis-ŕ-vis other countries, don’t think he will quite go for the price corrections route.
After all there is limited flexibility that local management teams have between the margin expectations of headquarters and the unrealistic taxation model in place in India. It will be a courageous company that takes the plunge and adopts a market maker mindset for luxury cars in India. Not holding my breath.

Not nitpicking here but I have observed a similar trend (using LHD interior pictures) at the BWM India website too while researching 330i. I am equally shocked too, luxury brands like BMW, AUDI can't take care of apparently a trivial issue and use RHD images to show interiors for the models they sell in India? Funnily they use the website to ask you to "Book online" and don't bother to use correct specs.

It certainly can't be an "extra cost" (to get RHD pics and use it) thing, than what it could be, not caring enough about Indian buyers?