Peter Schwarzenbaver(2nd L), Board Member of Audi AG and MichaelPerschke, MD, Audi India along with actors Katrina Kaif and Lisa Ray (PTI)

“We are more and more optimistic about this market," said Michael Perschke, head, Audi India. “In order to grow quickly in this market we have decided to locally manufacture the Q7 and there are plans to do the same with Q3 as well." The firm unveiled its entry-level SUV Q3 in the Indian market on Thursday to compete with BMW’s X1.

BMW gets one-third of its sales from the X1, an entry-level SUV with ex-showroom prices starting at 22 lakh. Rival Mercedes-Benz does not have a similar vehicle at that price point.

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Michael Perschke of Audi India talks about doing business in the country and why he wants Audi to become a household name

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“The local assembly will help them to price Q3 very competitively. This will be a volume car for the company," said Yaresh Kothari, sector analyst with Angel Broking Ltd, a Mumbai-based brokerage firm. “This will definitely snatch some numbers from BMW this year."

For the local assembly of these models, the firn will be raising its manufacturing capacity in India from 6,000 units currently to 10,000 in 2012, Perschke said.