BMW Group India is considering another increase in vehicle prices from October as the weakening rupee and rising commodity costs continue to put pressure on its operations.
If implemented, this will be the company’s fourth price revision this calendar year. BMW increased prices by up to 3% in January, followed by revisions of up to 2% each in April and July. The April and July increases applied to locally produced as well as completely built-up BMW and Mini vehicles.
While the maximum increases announced across the three rounds add up to 7%, the actual cumulative increase has varied across models. Hardeep Singh Brar, President and CEO of BMW Group India, said prices have risen by around 4-5% so far.
“We have increased prices about 4-5% till now, and there is another one around the corner,” Brar told Autocar India. “Prices will continue to go up for us because of pressure from forex, commodities and other costs.”
The company has yet to finalise the extent of the next revision. It is expected to vary across models, depending on their localisation levels and exposure to imported components.
Currency depreciation has been one of the main sources of pressure. BMW also faces higher logistics and material costs, including an increase in copper prices. The company cited rupee depreciation and rising logistics costs while announcing its July increase.
BMW has sought to limit the impact through local production. Around 95% of its India sales come from vehicles produced at its Chennai plant, with imports accounting for the remaining 5%. Localisation across most domestically produced models is close to 50%, according to Brar.
The benefits are visible in the pricing of the new 7 Series and i7. The locally produced BMW 740 M Sport and i7 are priced at Rs 1.95 crore, while the imported i7 M70 xDrive costs Rs 2.65 crore.
Brar said localisation enabled the company to offer the new design, technology and additional equipment without a substantial increase in price.
“The result of localisation is that we did not have to increase the prices despite all the bells and whistles and gizmos coming in,” he said.
Demand has remained firm despite the three revisions. BMW India continues to grow at a strong double-digit rate even as the wider luxury-car market remains flat or declines marginally, Brar said.
BMW Group India expects to sell more than 20,000 cars this year and remains on track to meet the target. The initial allocation of the new 7 Series and i7 is nearly sold out, while the i5 has also received a strong response.
A fourth increase from October would underline the sustained cost pressure on luxury carmakers, even as BMW expands local production to reduce its dependence on imports.
With inputs from Kiran Murali