BMW India targets increased localisation, ties up with 7 local parts makers

In a bid to increase its competitiveness in the Indian market by increasing the level of localisation in its vehicles and thereby reduce costs and the final sticker price of its cars, German luxury carmaker BMW has inked partnerships with seven leading Indian auto component suppliers for sourcing of components for local production of its cars at BMW Plant Chennai. The suppliers are Force Motors, ZF Hero Chassis, Draexlmaier India, Tenneco Automotive India, Valeo India, Mahle Behr and Lear India. With these partnerships, the level of localisation at BMW Plant Chennai will increase to approximately 50 percent.

Some of the major auto components sourced for local production of cars at BMW Plant Chennai are: engine and gearbox from Force Motors; axles from ZF Hero Chassis; door panels and wiring harness from Draexlmaier India; exhaust systems from Tenneco Automotive India; heating, ventilating, air-conditioning and cooling (HVAC) modules from Valeo India and Mahle Behr, and seats from Lear India.

Increased localisation of components in its cars will also help the carmaker 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. 

According to Philipp von Sahr, president, BMW Group India, “BMW Plant Chennai is the heart of our India operations. Since 2007, BMW Group has strengthened its commitment to the Indian market and has continuously increased the number of its locally produced car models. With a strong portfolio of locally produced cars, it is now the appropriate time for us to partner with major Indian auto component suppliers who will play a significant role in the future strategy of BMW Group in India.”

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 30 BMW Group 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 but also in cost optimisation and value addition.”

BMW India’s plant in Chennai began operations in March 2007 and currently produces the 1 series, 3 series, 3 series Gran Turismo, 5 series, 7 series, X1, X3 and X5. Currently, the company has 37 sales outlets in the Indian market either as CKD (completely knocked down) units or as fully imported CBU (completely built units). 

BMW India, which is currently 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.