Michael Ganal, Member of Board, BMW AG
The member of the board of management of BMW AG, sales and marketing, tells Sandeep Belagajee that his company wants to grow faster than themarket, and he does not judge the potential of the market by its current status.
What does India mean to BMW?
India means a lot to BMW. It is basically the last market which has a huge potential. By definition there are only two countries which have a population of more than one billion people: India and China. China is already experiencing a certain rate of sustainable growth, and the total market is already about five million cars a year. India is following in China’s wake. Its growth may not be as phenomenal as that of China, but it is also growing pretty rapidly. From a car manufacturer’s point of view, we are dependent on growth. So it is vital that we are in India and participate in its success story.
Would this still be true despite the fact that our premium car market in terms of numbers is still very small?
The fact that it is still small means that there is a huge potential for growth. You can argue that it limits your chances in the short term, but the potential for long-term growth is very immense. We do not regard India as a classic small market and do not judge its potential by the state of the market today. We have invested in a plant here and started a national sales company to support our activities. We have undertaken all appropriate measures to see that we are in tune with the needs of the market, and reap the benefits as it grows. From our side, the level of commitment is best indicated by the investments we have made here. If you look at our company, you will realise that we have always been strong in foreign markets. We have the highest export rate as compared to our competitors. Over the years we have learnt to invest in emerging markets, build up appropriate support structures and then participate in its growth. The official figures for India may not look very good in the short term or even in the medium term. The market for premium cars is only 5000 units, which is not very impressive. Experts say that it might be 10,000 units by 2015, and even this figure is not very impressive. But our experience in other markets tells us that forecats of growth in booming economies are quite often wrong. We are hoping that this will be true in India as well. This is why we have established a 100 percent subsidiary in India.
Internally how fast do you see this market grow and mature?
I can only refer to the official estimates go by what they say. But internally, we feel that this segment will grow faster than anyone can forecast or predict. Our target is not just to grow volume according to the market, but to grow faster than the market. That said it would be speculative on our part to commit to any growth figure now.
What are your plans for localising parts production here?
In percentage terms, the local content on the 3-series is not very impressive, but how fast localisation happens depends entirely on the Indian supplier base. The door panels and the seats on the 3-series are sourced locally, and we are prepared to source more if the suppliers meet our quality requirements. We are in the process of opening a purchasing office in India that will generate an in-depth profile of the availability of superior quality automotive parts. Depending on what our studies indicate we will then buy parts not just for our India operations but for our global operations as well. We are already talking to some supplier already, and we have asked ACMA to help us identify the right vendors. This process will take some time, but we are prepared to do everything to develop a vendor base that meets our global standards.
What about further investments? How fast can you scale up?
We can do that in a matter of months. We now produce 1,700 units in single shift, and if needed we can introduce another shift. There are no plans for the time being on further investments on the production side but we may see some investments on the dealer side.We have eight dealers, and each one may make about $2-3 million investments. We expect to have 12 fully functional dealerships eventually.
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