BMW bets on value price proposition to grow in India

Buoyed by the sales of around 6200 units in 2010, BMW India is looking ahead to 2011. The plans include a push to the dealership network, new car launch and continued brand enhancement. The German automobile major also plans to ramp up its Chennai unit’s capacity. BMW India chief Andreas Schaaf spoke about the plans in detail. Excerpts:

How do you see the BMW India’s last year’ performance?
BMW is the number one car manufacturer in the premium segment in India. We have successfully retained our number one position last year. BMW India has also achieved a market share of over 40% last year in 2010. We have not only achieved highest sales in the country last year, but much of the achievements have been also in terms of qualitative aspects. We emerged as the strongest premium brand in India from the customer point of view. We will continue to focus on retaining our leadership position in the Indian market, not only in sales but everything that we do.

What were the key factors that contributed to the growth?
I think the most important part of the business last year was our second wave of our Indian market offensive. Some of those key pillars of the India strategy are an aggressive product offensive, rapid market expansion by setting up new dealerships, investment and development in our brand envisaging totally new business opportunities, be it financial services or used car segment, and greater customer intimacy. So, we are in the right position for future. In this context, I would like to highlight the new BMW X1. It is one of the strategic, most important product that we have launched in India.  It is clearly aimed at taking forward the success story in India. We have carefully decided the price position of the car. We decided to go with the value price proposition that will enable us to grow in India in the years to come. It’s a vehicle that brings the BMW characteristic in the compact vehicle segment. BMW 5 series has also contributed to the success story in India.

How do you now plan to build upon it?
In 2011, we will further expand our product range. We will soon start with the launch of our high-end top luxury product - the BMW six series convertible — in India. The car might not have the relevance in terms of volume contribution but will certainly have huge relevance in terms of brand contribution. This car will underline the premiumness of the BMW brand. We also have another highlight for this year - the BMW X3, which will be launched in the country this year. The car will be launched as a completely knocked down (CKD) version at the Chennai plant.

This means that our plant in Chennai will produce the BMW three series, five series, the new BMW X1 and the BMW X3. The X3 is elegant sporty car and at the same time has all the versatility of a SUV. Today we are operating out of 20 facilities in the country. We have decided to double our dealership in India to 40 facilities. This will not be the end of the dealership in India. The more active we are, the more capable we will be to develop the market. We are, of course, committed to India.

What are the proposed changes at the Chennai facility?
We have ramped up the Chennai unit capacity from 10,000 units a year from 8,000 units on a single shift operation. We have increased our production capacity for this year. That means we are in a position to increase the production if the market demands so. The additional investment is required on land. We have acquired 20 acres and doubled the size of the plant. The idea is to enlarge the current facility.

Will the increased taxation on CKD play a spoilsport?
CKD is anyway a temporary model. Nobody would set up the CKD model for ever. It is a model to enter into a market and develop it. We will look into the development of the market and whenever we think it requires a different model and we think that India will grow in this range, we will also relook into our operations in terms of the right model.

What kind of growth are you looking at?
I think it is going to be in the range of 30-50% growth from segment point of view.