The Hindu Business Line : Audi bullish on India; sees ‘metropolitan’ strategy as the way forward

Global sales during Jan-March show that we are right on track and this is equally true for India where 2008 saw 1,050 customers, a jump of 200 per cent. — Mr Rupert Stadler, Chairman of the board

Murali Gopalan

Mumbai, April 19 Mr Rupert Stadler, Chairman of the Board of Management of Audi AG, was in India recently for the Volkswagen plant inaugural at Chakan near Pune. The German luxury carmaker is bullish on prospects in this country despite the global slowdown that has had its fallout on the auto industry. Mr Stadler believes that even in such trying times, companies with a clear strategic vision will survive. He took time off to speak to Business Line.

What do you have to say about the effect of the global financial crisis on the auto sector?

There are no two ways about the fact that this crisis, which began in late 2007 and the beginning of 2008, has hurt the automotive industry. If you look at Spain, which lost 50 per cent of the whole market in the last 6-8 months, or the US where the market is down to 9.5 million units (from 16-17 million) annually, it is clear that we are living in absolutely different market conditions where only companies which are best prepared will survive.

The US market has always shown a lot of overcapacities and the Big Three (General Motors, Ford and Chrysler), in my view, possibly did not care too much about that. They did not invest considerably in innovations. As for European brands, mass producers are under pressure and those companies that did their jobs well during the last few years are in good shape.

How has Audi fared in these conditions?

When we look to our business history, 2008 was the thirteenth year of continuous, profitable growth for Audi. We invested heavily in products, new innovations, technology and markets.

For example, we are the clear premium brand leader in China. We decided to come to India 2-3 years ago and this was a new market for us.

From our point of view, the way forward is to invest in a metropolitan strategy which means being in big cities like New York, Los Angeles, Moscow, Frankfurt or Berlin. At Audi, we do the right things at the right time and are well prepared.

Does that mean the slowdown has not quite affected your company?

Well, when we at Audi talked about fighting a tough situation in 2009, we knew that the markets were declining which meant lower volumes. However, we wanted to gain market share which is not easy.

Global sales during January-March show that we are right on track and this is equally true for India where 2008 saw 1,050 customers, a jump of 200 per cent. This is thanks to the right investments in the brand to communicate its core values.

Have priorities of global carmakers changed overnight with the economic crisis?

I would like to reiterate that Audi had, years ago, defined a clear strategy for the years 2010 and 2015 with the focus now on 2020 also. We have a clear approach in terms of product, countries and investments.

The global auto industry is stunned with the financial crisis and the levels of damage inflicted. But if you have a good strategy, it can still work in tough times. Those who don’t have one are suffering and lamenting that things have changed.

For instance, there is a lot of talk about climate issues and carbon dioxide emissions but these are not subjects that cropped up yesterday. At Audi, we have adopted a long-term approach where we really challenge our engineers to work on areas like cleaner emissions. There are programmes we began 15 years ago and continue to work on even today.

We know what we need to do and where we want to be, which is being the most successful premium brand in the world. This is not about volumes alone but about emotion and perfect cars, profitability and also being an attractive employer. We know people drive business, and want to retain the best talent.

Experts believe that a handful of global platforms are enough to keep costs in check. Would Audi follow a similar model?

As a premium brand, we work with one fundamental structure which is common to the US, Europe or China. When you talk of economies of scale, I would personally prefer an excellent shape and nice design. I would rather not talk about platforms but look at emotional design and technological innovation.

Would the single brand focus be equally true for countries like India where volumes are much smaller for Audi?

I am absolutely convinced that there is only one business paradigm which is one brand and one standard. There could be marginal alterations for different markets. For instance, the Chinese prefer soft seating while Indians go in for gadgets in a big way. From our point of view, we have to understand circumstances in different countries but the brand value is one.

Would Audi go in for multiple branding with group companies, Volkswagen and Skoda, at the retail end in India?

Absolutely not! If you compare Volkswagen to other big automobile groups in the world, you can see how it has given independence to individual brands. Each of us has to do our job and not ask mama’s help all the time! This is what finally drives brands in the business.

When will you graduate to full-fledged manufacturing from the present assembly route?

This is a difficult question to answer because you need volumes and the premium market in India is still very small today. It will grow but it will take time. Whatever is needed in the future, we are flexible enough to act accordingly.

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