Audi may open assembly plant in India to boost Asian market

Audi may open assembly plant in India to boost Asian market

By Alexander Corne

AUDI AG is considering establishing an assembly plant in India
to boost its presence in the growing Asian car market.

Audi may decide to go it alone if it signs off on a plant in
India in the next few months. Unusually it may decide to set up
an assembly plant without a joint venture partner.

Along with Volkswagen, Audi already has a factory in China. It
was one of the first international carmakers to set up there, and
now builds up to 60,000 cars a year, mainly Jettas and heavily
modified Audi 100s.

A new sales office is expected to be set up in Singapore to
focus more closely on the region, specifically to develop
dealership and brand image among prestige buyers.

The board member for purchasing, finance and organization for
Audi AG, Mr Eric Schmitt said Audi was targeting BMW and
Mercedes' sales in Asia.

A sales office in Singapore will give Audi more flexibility to
take on its competitors, Mr Schmitt said.

Audi wants to narrow the gap to BMW quite substantially in all
markets. To achieve its sales growth in Asia, Audi has to wrest
customers from BMW, Mercedes and Volvo.

Demand for Audi products throughout Europe is accelerating
beyond the company's two factories' ability to supply, with the
A3 three-door model selling 50,000 cars in its first six months
on sale, and 100,000 cars the target for this year.

The A3 production line is already close to capacity with two
shifts a day six days a week.

It is believed that the success of the three-door A3 has
delayed the introduction of the A3 five-door, now expected to be
unveiled at the Frankfurt motor show in September.

The high demand has forced Audi to make decisions on
production outside Germany.

In South Africa, Audi produces the A4 sedan, and this has been
touted previously as a supply for right-hand drive markets such
as Australia. But Asian markets are more likely to be supplied by
factories set up or soon to be set up in the region.

Mr Schmitt said the factory in China could theoretically
produce for Australia and other Asian export markets.

He said once quality levels in China's plant matched Germany,
export could begin.

In the meantime, Audi is said to be considering production in
Hungary. The 1.8-liter four cylinder engine that powers the A3
and A4 is produced in Gyor, Hungary already.

Mr Schmitt said Audi would build cars in Asia with Asian
buyers in mind. He said a longer version of the A6 would appear
in time.

The stretched A6 is 90mm longer in the wheelbase, most of the
extra space afforded to rear passengers.

Mr Schmitt also called for lower tariffs in Asia, particularly
in Korea and Indonesia, which would make luxury car sales easier.

He said Audi expected a 30 per cent increase in sales in Japan
this year.

Audi's business in Asia is growing faster than any other
region, but it is still a small part of the company's overall
business.

Overall production targets for the brand this year amount to
500,000 cars, split between four platforms, the Golf-based A3,
the A4 platform, the A6 platform and the all aluminum A8
platform.

Mr Schmitt said the minimum survival volumes per platform was
125,000 cars, although the aluminum A8 was a special case, with
sales barely reaching 1000 cars last year.

Greater under the skin component sharing with the three other
VW group car makers will help reduce costs to help Audi take on
BMW and Mercedes-Benz, Mr Schmitt said.