Muonio (Finland): In a recent statement, German automaker Audi expressed optimism about the growth of the luxury car market in India. However, the company believes that until tax structures are rationalized to a more reasonable level, the penetration of luxury cars in the Indian market will remain comparatively low, especially when compared to Southeast Asian countries.
Audi anticipates a moderation in the growth of India’s luxury car market to low double digits in 2024, a shift from the remarkable 25% growth witnessed in 2023. Balbir Singh Dhillon, Audi India Head, highlighted the overall growth of the automotive industry in the country, attributing it to the positive trajectory of India’s GDP and other growth indicators.
Dhillon noted, “Last year was one of the biggest numbers that the industry could achieve, which is also in line with the overall growth of the country. So we believe we are in the right space at a good time and it’s time for India, and we will continue to grow as well.”
While the luxury car segment is expanding, Dhillon acknowledged that the Indian market is still in its nascent stage. He pointed out that Audi, along with the entire industry, sold around 48,500 cars in 2023, constituting just over 1% of the overall car industry. In Southeast Asian countries, the penetration of luxury cars into the total car market is notably higher, ranging from 5 to 20 percent.
Dhillon emphasized, “So I think we have still a lot of area to cover,” suggesting that a reduction in taxes would be a catalyst for the further growth of the luxury car market in India. The current tax rate, including GST and cess, on most luxury cars is approximately 50%, which Dhillon hopes will be rationalized in the future.
“We do see this trend that overall, in some point in time, the taxation structures will get rationalized (and) the industry will also grow much faster,” he added.
Despite facing challenges, Audi India remains positive about the outlook for 2024. Dhillon acknowledged the impressive growth of Audi India by almost 90% in the previous year, outpacing the industry’s growth rate of 27%. Looking ahead, he expects the industry to grow in 2024, albeit at a lower double-digit rate, and Audi India aims to sustain growth within the same range.
In 2023, Audi India successfully sold 7,931 units, showcasing substantial growth compared to the 4,187 units sold in 2022.
