‘We have 30 suppliers for worldwide production in India alone.’

BMW Group India’s president tells Shobha Mathur that the Indian market is totally integrated into the carmaker’s worldwide production system.

We understand that BMW India is planning to bring the Active Hybrid Series 7 model to India in July. Could you elaborate on the plan?
Yes, it could come but I cannot make any statement right now. We have launched the BMW i brand for hybrid and electric vehicles at the Auto Expo this year. Yes, there will be some models coming this year. Your prognosis is quite good but we will inform you at a later stage. We have to come from one model to another. We are very proud to launch the all-new X5 sports activity vehicle today (May 30).

Is your brand strategy going to be hybrid-driven, going forward?
Yes, that is a very important issue in India because Indians love luxury – when they spend money for a house, for travel maybe, yet not so much for cars. But I think this is a process that will come automatically in the next few years. It is very important to have luxury cars and not go too much down on the price because you are then in the volume market.

BMW India plans to get its engines assembled by Force Motors in Chennai. What is the current status on that?
That’s a statement from Force Motors that we don’t comment on. It has not come from us. At the moment, we are very happy with our strategy and, if it is necessary, adapt it. But there is nothing further to communicate in this direction.

The Indian government had imposed a penalty of around Rs 650 crore on BMW India for evading import duties on imported SKD kits. What relief you are expecting from the new government in this matter?
This is a normal process and we are cooperating with the Indian government. Now, there is a new government so we cannot tell more in this case.

What are your expectations from the new government?
It is always good to have some change – this is really a time of change in India. My wish-list as a car manufacturer is to clearly have stable conditions in the market because the biggest enemy for the car business is uncertainty. For example, you don’t know how it is going to be in the next 5-6 months, whether the Budget discussion is going up or down. We, as a car manufacturer, require stable conditions. They may not always be attractive conditions but they should be stable, so that we can work with them for some years.

Are you looking at any tax exemptions to drive growth in the luxury car market?
Of course, the BMW Group worldwide is for free trade but we have to face the situation and adapt our strategy. Free trade is a wish not fulfilled at the moment, not only between India and other countries, but also otherwise in the world.
In a changing environment, it is very important to have a long-term stable strategy. We are looking for sustainable leadership, not short-term success. A sustainable leadership develops the brand that gets very attractive and we have very high-quality dealerships. We are No. 1 in the JD Power ranking compared to our competitors. These are things that are very decisive to have future success.

What do you feel about the luxury car market in India?
The luxury brands are talking of how to develop brands in the luxury car market at the moment. What the luxury car market should not do is go in for a discount policy because BMW is not number one in discounts. So maybe we lose on sales but that is part of our long-term sustainable strategy. A price war is something for volume manufacturers – they can do it better than the luxury car manufacturers.

How many new models do you plan to bring for the Mini brand this year?
First, Mini is the first lifestyle brand worldwide. Mini is small and expensive but Indians love it. There will be some very relevant new models coming during this year.

What is BMW’s strategy for localising its engines in India?
It is difficult to explain – we don’t have a certain percentage of localisation but a lot of purchase of parts is done in India and then they bring it to other countries. The Indian market is totally integrated into the worldwide production system. For instance, we have 30 suppliers for worldwide production in India alone. What I can tell you is that 90 percent of the BMWs you see on Indian streets are produced in Chennai.

Including engines…
Yes, final production of the engines at the moment.