Audi to Build Q5 in India

Audi AG said Thursday it will start assembling the Q5 luxury sport-utility vehicle in India from March to save on steep import taxes and compete with BMW AG, Daimler AG and Porsche AG in the world's second-fastest growing major economy.

"India is the second country after Germany where the Q5 will be assembled," Benoit Tiers, Audi India's managing director, told reporters while announcing the introduction of the new version of the Q7 SUV.

Mr. Tiers also said Audi will introduce its financial services and insurance business in India by December. The company currently offers insurance for its vehicles via Bajaj Allianz General Insurance Co. Ltd.

Fully built cars and SUVs in India attract an import tax of 116%, Mr. Tiers said, adding that the tax drops to 60% if the vehicle is assembled from completely knocked down parts.

Audi, the premium brand of Germany's Volkswagen AG, assembles the A4 and A6 luxury sedans at the factory of Skoda Auto AS at Aurangabad in the western state of Maharashtra.

Czech carmaker Skoda, another unit of Volkswagen, makes cars such as the Laura and Superb at the same factory, which can produce up to 3,000 vehicles per year.

Tiers said Audi India has already spent two-thirds of a €30 million investment planned until 2015.

Audi India sells the Q5 with 2.0-liter gasoline and a 3.0-liter diesel engine options. Thursday, the company began selling the new Q7 SUV with 3.0-liter diesel, a 3.6-liter gasoline and a 4.2-liter gasoline engine options.

audi q5

Audi also imports and markets the A8 luxury sedan, as well as the TT coupe and the R8 sports car in India.

Audi Q5 Silver

It sold 1,128 vehicles in India during January-August 2009, a 62% rise from the year earlier. Tiers said the company aims to sell more than 1,500 cars in 2009, compared with 1,050 cars last year.

The automaker currently has dealers in 12 cities, which it aims to expand to 18 by 2011, he said.

Audi Q5