BMW readies India script

BMW is gearing up to kickstart its Indian innings. The plant in Chennai will primarily be an assembly operation on the lines of its German counterpart, DaimlerChrysler India. But this is where the similarity ends. BMW will not outsource assembly of its engines in India as Mercedes does to Bajaj Tempo. Neither will its car bodies be painted by another manufacturer as is the case of Tata Motors meeting Mercedes’ needs here.

The plant has been designed with an annual capacity of 1,700 units at one shift but this can be doubled. BMW believes that a dedicated paint shop needs an investment of 30 million Euros which, in turn, will be justified with at least 10,000 cars being produced. The car bodies will come from the main plant in Germany. “At BMW, we have global competition between plants and the best wins. We consider logistics, delivery time, frequency of shipping in addition to price,” says Peter Kronschnabl, president of the Indian arm. The quality apparently is the same from each of these plants, be it Germany, South Africa or Thailand.

The engine is considered as the core component of any BMW and hence the company will import assembled motors. This will allow flexibility as well as the chance to test the waters. While Audi and Merc have one diesel and one petrol variant per model, BMW will have two. The seats of the cars will be sourced locally and this includes the actual seat frame and foam as well as the leather and electronics. This is for both the 3- and 5-Series cars. The door pads of the 5-Series will also come from India. Lear in Chennai is likely to be the supplier. On the face of it, this may not seem a big step but it is pertinent to bear in mind that this is up to 10 percent of the total value of the car.

In the initial phase, the plant will be built on a 22-acre plot with a covered parking for cars produced as well as a short test track. The 5- and 3-Series have already been tested extensively in India. They will be modified slightly in terms of an additional fuel filter, better air filter, increased ground clearance, reinforced shock absorbers and an additional protective steel plate at the bottom.

There will be two phases of dealer network planning. Phase one will run until 2009 and the aim is to have one dealer in 10 Indian metros. Among those appointed are Navnit Motors in Mumbai and Bangalore and Deutch Motor in New Delhi. “Navnit has a lovely dealership in Bangalore that can compete with any international dealership,” says Kronschnabl.

Both Mumbai and Delhi will have an additional dealer each. As BMW is very strict on aftersales service, dealers can only begin selling cars after an interim workshop is in place. There will be a German technician sitting in Delhi and BMW plans to establish something like a flying doctor service if any difficulties arise. “I know that Indian customers are very demanding and we want to ensure that the honeymoon is not over when the car is delivered. We plan to keep a close eye on dealers to ensure a high level of satisfaction,” he adds.

The parts warehouse will be located in Mumbai and components will be shipped directly in through. Once in India, they will get to their destination or workshop in less than 24 hours. BMW also plans to bring the Mini to India with assembly operations likely at a later date.