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Luxury car market leader Audi on Thursday sparked a price war in the entry-level sedan segment, launching the A3 which, at a starting price of ₹ 22.95 lakh, is India's most affordable luxury sedan and only a shade more expensive than the BMW 1 series hatchback.
Available in both petrol and diesel variants, the company expects the A3 to account for at least 15% of its annual sales, which would help it stretch its lead over German rivals Mercedes and BMW. Audi sold a little over 10,000 cars in 2013.
The A3 is also seen as Audi's response to Mercedes' twin hatchbacks A and B Class launched last year, which drove the company's growth in 2013.
"This is not a smaller A4 sedan but has an individuality of its own. It reflects the changing taste of Indian consumers and is meant for young people who love to drive themselves and value a proper sedan," said Joe King, head, Audi India.
"With the A3 we are confident of ending this year with strong double-digit growth. In 2015, when we get a full year of the car, the growth will be even stronger," King added.
Mercedes will launch its compact luxury sedan CLA this year, but it is unlikely to be at the A3 price-level. But A3 could get stiff competition from the Q3 which starts at ₹ 25.35 lakh and has the same engine. "There will always be an element of cannibalisation but that will be restricted to the extent of who prefers an SUV and who wants a sedan," King said. "The two cars have different identities and will appeal to different consumers. So long as the customer is buying an Audi, we do not have a problem whether its an A3 or a Q3."