From engines to transmissions and HVAC, BMW India increases localisation to 50%

In a bid to increase its competitiveness in the Indian market, German carmaker BMW has increased the level of localisation in its cars assembled at the Chennai plant by upto 50 percent. By doing this, the carmaker will be able to reduce costs and the final sticker price of its cars.

To achieve cost optimisation, BMW has inked partnerships with seven leading Indian auto component suppliers for sourcing of components. They are:

- Force Motors (engine and transmission)
- ZF Hero Chassis (axles)
- Draexlmaier India (door panels and wiring harness)
- Tenneco Automotive India (exhaust systems)
- Valeo India (HVAC modules)
- Mahle Behr (HVAC modules)
- Lear India (seats).

It may be recollected that Autocar Professional had reported this in its February 15, 2015 issue and had first broken the news of the Pune-based Force Motors assembling engines for BMW India on April 29, 2014. With these partnerships, the level of localisation at BMW Plant Chennai will increase to approximately 50 percent.

Increased localisation of components in its cars will also help BMW India to both cut down on taxes, which are 120 percent on imported cars and 60 percent on partly assembled cars, as well as improve the workshop and aftersales operations where waiting periods for some imported components is high.

BMW India highlighted its localisation strategy today at the Chennai plant where Sachin Tendulkar marked the occasion by assembling a 5 Series using parts from Indian auto component suppliers. 

Commenting on the decision to increase the local content in its India-assembled cars, Philipp von Sahr, president, BMW Group India, said: “With a strong portfolio of locally produced cars, the time was appropriate to partner with major Indian auto component suppliers. This decision benefits BMW in terms of cost optimisation and value addition while at the same time it creates business and profitability for our suppliers – a win-win situation."

Robert Frittrang, managing director, BMW Plant Chennai, said, “BMW Plant Chennai takes pride in producing cars that have the same international quality standards as any of the BMW production and assembly facilities worldwide. Highly skilled employees, advanced manufacturing processes along with state-of-the-art machinery and technology provide all the necessary ingredients to achieve these tough standards. We are confident that through our partnership with Indian auto component suppliers, we will set even higher benchmarks not only in quality standards and supply chain management.”

BMW India’s plant in Chennai, which began operations in March 2007, currently produces the 1 series, 3 series, 3 series Gran Turismo, 5 series, 7 series, X1, X3 and X5 on two assembly lines. Currently, the company has 40 sales outlets in India.

BMW India, which is facing aggressive competition in the luxury car market in India, sold a total of 6,812 units in 2014, compared to Mercedes-Benz India’s 10,201 units and Audi India’s 10,851 units.

Photography: Aditya Bedre