German carmaker Audi AG has credited its overwhelming luxury car success in India to its unique market penetration strategy – rapid expansion to smaller cities in the country as well as the launch of small sport utility vehicles. Conventionally, luxury carmakers pounce on large cities in India -- Mumbai, Delhi, and Kolkata – where majority of the country’s rich are residing.
They entice these wealthy people to buy their luxury units by offering lavish sedans and big SUVs. But Audi broke the convention by reaching out to the wealthy living in smaller cities and bringing in a smaller SUV in 2012.
To further increase its fortunes in India, Audi is planning to offer more SUVs, but won’t replicate its rivals’ move to introduce a compact hatchback in the country. Michael Perschke, Audi India brand director, remarked that for the carmaker, the offering sequence will be: SUVs first, then sedans and then hatchbacks. He noted that India is a country where SUVs have multiple benefits.
Perschke quipped that to attract customers in smaller cities -- where roads are rougher but not as narrow as those in large urban areas -- Audi may offer a new range of sportier SUVs in addition to three existing offerings. Audi will introduce the compact A3 in India in 2014, but in a sedan version rather than a hatchback. On the other hand, Audi’s rivals BMW and Mercedes-Benz are intruding hatchbacks in India, where demand for these vehicles is slumping due to the country’s slowing economy.
As a result, Audi posted a 43-percent jump in sales to 9,350 units in the year ended March 31, 2013, overtaking a BMW that logged a 9.5-percent drop in sales to 8,686 units, according to data compiled by Bloomberg based on figures from the carmakers and the Society of Indian Automobile Manufacturers. Mercedes recorded a 5.4-percent dive in sales in India to 7,015 units in the same period.