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Bullish On India Luxury Car Penetration Expected to Remain Low Till Tax Rationalisation: Audi

Audi India anticipates moderate growth for luxury cars in 2024, citing high taxes as a hindrance to market penetration. Despite robust sales in 2023, the German automaker calls for tax rationalization to unlock the sector's potential and match Southeast Asian markets.

German auto maker Audi is bullish on India but believes that till the time high taxes rationalise to a lower level, penetration of luxury cars in the country will continue to remain low compared to South East Asian countries, according to a senior company official.

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Audi expects growth of the luxury car market in India to moderate to low double digits in 2024 compared to around 25 per cent in 2023.

"The overall car industry is growing, as well as the luxury segment is growing. 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," Audi India Head Balbir Singh Dhillon told PTI.

He further said, "(India's) GDP is growing, all the parameters that you see for the growth of automotive industry is showing an upward direction. 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."

Dhillon was responding to a query on how Audi is looking at India as a market for its overall growth strategy from a global perspective.

On the potential of the Indian market, Dhillon said, "If I compare the Indian luxury (car) space, I would still say we are in the nascent stage.

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"We (industry) sold about 48,500 cars last year, which is just a little over 1 per cent of the overall car industry. So we still are very small in terms of the percentage and the Southeast Asian market."

In many countries in that region the penetration of luxury cars to the overall car market is in the range of five to six per cent and in some markets as high as 20 per cent, he said.

"So I think we have still a lot of area to cover," he said, adding, a rationalisation of taxes to lower level will help fuel the growth of luxury car market in India further.

"We do see this trend that overall, in some point in time, the taxation structures will get rationalised (and) the industry will also grow much faster," he said.

As of now, the overall tax rate (GST plus cess) on most of luxury cars are about 50 per cent, he added.

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"I'm sure at some point in time it will rationalise that will give us a kick-start for a very fast growth, till that it will continue to grow maybe at a lower space," he said.

When asked about the outlook for the year, Dhillon said, "(Audi India) grew by almost 90 per cent last year and the industry grew by about 27 per cent.

"So, we do see the industry growing also in 2024, but may not, may not be to the extent of 25-26 per cent but low double digit and we also see ourselves growing in the same range in 2024 as well."

Last Audi India sold 7,931 units in 2023 as against 4,187 units in 2022.

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