BMW opens India innings

It took BMW a good decade after its equally celebrated German counterpart, DaimlerChrysler to enter India but this was of little relevance as it unveiled its plant in Chennai on a typically hot day. As journalists swarmed into the facility, the stage was set for the press conference where the chairman of BMW, Norbert Reithofer was present along with his top management team.

He reiterated that India offered great potential for his company. Experts have already predicted that annual production of cars will exceed the two million unit mark by 2010. Interestingly, Reithofer indicated that this would happen by 2015 but given the current rate of growth and new investments, this will certainly occur in the next three years.

Needless to add, the premium segment will grow faster because of the smaller base it operates in. Here is where BMW believes there is a tremendous opportunity especially with the kind of rising income levels that India has been witnessing over the last few years.

WILL MINI MAKE IT?

Interestingly, added president of BMW India, Peter Krosnschabl, a feasibility study is underway to explore the option of bringing the Mini here. If things go according to plan in terms of viability, the car could debut in 2009.

Similarly, the pace of localisation will largely depend on BMW’s comfort levels with Indian vendors. It is always a greater challenge to meet the requirements of luxury carmakers but the supplier base here is already meeting the global needs of DaimlerChrysler and there is no reason why they would not be able to follow suit with BMW either.

From the carmaker’s point of view, this will also help in a big way towards cost control and the long-term possibilities of using India as an export hub for neighbouring countries though the present numbers of 1,200 cars annually are rather modest. Of these, 90 percent will be manufactured (the 3 and 5 series) and sold in equal proportion while the balance (7 series and X3) will be imported. The 3 and 5-series will be priced in the range of Rs 26 lakh-Rs 42 lakh.

As in the case of Hyundai which has a two-tier structure in the form of its manufacturing facility and corporate office, BMW will also have Delhi as the official address of its Indian arm. Clearly, this has also been done keeping in mind the potential of the North Indian market and the fact that it just makes commercial sense to be located in the Capital.