'We can grow at a faster rate if the government maintains a stable policy framework.'

by Hormazd Sorabjee, Autocar India Mar 01, 2018

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Vikram Pawah, President, BMW Group India, speaks to Hormazd Sorabjee on prospects of the locally assembled Mini Countryman, urgent need for stability in policy-making and strategy to fill product gaps.

How is the Mini brand doing? BMW is launching the Countryman as a locally assembled model. So do you see greater volumes for the vehicle?
Mini has established itself as a niche premium hatchback in the Indian market. Customers who love that typical go-kart experience have attached themselves to the brand. Talking about numbers, Mini grew by 17 percent last year itself without any new product, albeit on a small base. The new Countryman features a new design, is based on a new platform and is more spacious. As a full five-seater, it retains the dynamism of a typical Mini, so customers can use it as a daily car as well as for a weekend expedition.

We are introducing the Countryman as a completely knocked down (CKD) model, with an aim to make it more affordable and introduce the brand to a wider range of customers. It will go on sale in India from June 2018. We expect the luxury hatchback segment to grow significantly on the back of the new Countryman.

It’s ironic that just as you are bringing the Countryman as a locally assembled model, the government has proposed an increase in tax on CKD components. How do you feel about that?
I don’t feel good about it at all because we thought the dust had settled after the unexpected revision in GST rates and we would have some stability in policy now. But the continuous flip-flop in policy-making does impact the customer sentiment. Imagine, we just increased the prices in September because of GST, and now we have to increase it again because of what the government just announced.

However, we don’t want to transfer the burden to our customers instantly, and they can buy the cars at the same price until March. We request the government to be little long-term oriented and have some stability in policy-making because it’s not just carmakers who get affected. Customers, too, need time to purchase cars as it’s not as simple as buying toothpaste.

The business environment has been volatile with policy decisions such as demonetisation, GST and increase in duty on CKDs. How has that impacted BMW?
We could have grown further, that’s for sure, and if not for the volatile environment, buyer sentiment would have remained intact. However, we have a product offensive strategy in place to overcome the policy hurdles and we are confident of growing in the market. But if the government maintains a stable policy framework for a while, we can grow at an even faster pace.

2018 is an important year for you with two new models, the 6-series GT and the X3, lined up. Do they give you the confidence to take on segment leader Mercedes-Benz?
I am very confident of growth, thanks to our Power to Lead strategy that we have put in place since the last couple of years. For us, it’s not about being the number one but about growing in the market, and we have proven it last year with the 5-series launch. We want to replicate that growth in 2018 as well.

Talking about the X3, the SUV has been a phenomenal success for us worldwide. When it comes late this year, it will provide a great value proposition to the customer and will expand the segment. The 6-series GT is a versatile product that will appeal to customers who want to be driven or even drive themselves.

Is there a strategy to fill the product gap in India with models such as the X2 and the M2 from your global portfolio?
When we look at our global model line-up, there are plenty of models that we can bring to India. But the decision to get them here depends on how those vehicle segments are growing. So yes, we are looking at the X2, M2 and other models all the time, and when the time is right for those segments to grow, we will bring those cars.

Going ahead, will you invest more in CKD as it brings down the cost dramatically over CBUs?
We already have local assembly operations for most of our vehicles, with localisation content of up to 50 percent. New vehicles such as the 6-series GT are already being locally assembled and the upcoming X3 SUV will be assembled locally as well. The M5 is brought in as a full import since it is a niche segment car.

 

 

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