Phygital is the way forward’

Balbir Singh Dhillon, Audi India’s head, hopes that the sales will bounce back in the country powered by the YOLO mentality of customers

As the country limps back to a sense of normalcy, I spoke with Balbir Singh Dhillon, Audi India’s boss about how he believes the luxury car market in India will proceed. To start with, over two-thirds of Audi’s workshops are open as are half of the showrooms that are following all social distancing norms. But Dhillon says that there are challenges, not just social distancing, inside showrooms, but other norms such as the rule in Chennai that car showrooms cannot use air-conditioners. “There are some unique challenges in some states”, he says.

But what about car sales? Not a single unit was sold in April. In fact,  one mustn’t forget that no cars could even undergo routine servicing. Audi India, like several other manufacturers, found itself in a slightly piquant situation. “Well, each one of our workshops had customer vehicles undergoing service and repairs. Our first priority is ensuring that those get back to their owners as soon as possible as we restart operations.” At the same time, Audi India ran a special service scheme for ‘Covid Warriors’ to ensure that Audi vehicles owned by those on the frontlines of facing the virus that originated in Wuhan are serviced or repaired on a priority basis.

As for sales, since all Audis, even those assembled in India, are made from parts shipped from abroad, Dhillon said that customs authorities are being slightly cautious and understandably so. And despite some showrooms opening up, several states are just figuring out how to tackle the lockdown now. This, Dhillon believes, will lead to ever increasing levels of digitisation in the selling process. “Customers have been digital, but they initially researched the cars they wanted to buy and read reviews online. An average customer and his or her family spends around 100 hours buying a car. Earlier, maybe a third of the time was spent online and then there were visits to the showroom. Now that will go up to over half, maybe even two-thirds. We are enabling that with things like the Audi ‘Virtual Showroom’ as well. Yet, digital will not replace physical, that is why I believe the way forward is ‘phygital’, where digital showrooms and experiences will enhance the physical buying process.”

But can the market recover from the virus-hit first few months of 2020? Dhillon reckons, it will be tough, as the industry already dealt with a challenging 2019, where volumes fell 15 per cent. “The first quarter of the calendar year 2020 saw volumes continue to decline”, he admits. But he maintains a positive spin on things going forward. “I believe the thought process will change, people will start thinking on the lines of ‘YOLO’ (You Only Live Once) and will want to splurge on a luxury vehicle for driving getaways.” He added that the supply-side interventions by the government, might not have any immediate impact on sales but will have a long-term positive effect.

“It would have been nice if the government made some demand-side interventions such as a reduction of GST rates, which are still far too high in India. Rates between 43-48 per cent coupled with registration charges ranging from 10-20 per cent have meant that the luxury segment is just one percent of the overall car market. Even a slight reduction in these rates could have proven to be a booster to growth, but we must accept this and move on. We have to continue to do what we do best, that is selling emotions, dreams and positivity”, Dhillon told this columnist, which is why he continues to believe in inculcating brand loyalty for Audi early on.

However, the higher charges on luxury cars has proven to be a hindrance for the government’s ambitious ‘Make in India’ project. While 90 per cent of the Audis sold in India, such as the best-selling A3 and A4 sedans and the Q5 SUVs are assembled in India, Dhillon admitted that localisation levels are low. “With more proactive policies we could have reached 1,00,000 units easily but the system has to work together for that. Such numbers would not only have meant more manufacturing and localisation in India, but also newer technologies and products for us.”

The lockdown might be winding down but the economy and sales are in tatters, Audi is not going to hold back from its previously planned launch schedule for 2020. “Sure, there will be short-term adjustments such as a launch getting delayed by a month or two, but there are no changes in plans.” And in other markets, as restrictions lift, sales have seen a bounce. In China. for example, the country where all the troubles began, sales have stabilised to nearly the levels they were before everything went haywire. Dhillon and his colleagues at Audi India are hoping the same will happen here as well.