For BMW, everything’s happening as planned

Peter Kronschnabl, the president of BMW India, was always clear in his mind about making the company a market leader in the luxury cars segment by 2009. Having achieved this goal, with sales driving ahead of Mercedes Benz each month since January, Kronschnabl is now focused on maintaining this lead.

According to him, BMW’s global practices and its emphasis on setting up world-class dealerships has helped the brand generate considerable brand loyalty. Kronschnabl took on the India assignment in 2006, which logically should have come to an end sometime later this year. But the man will continue to lead BMW India much beyond 2009 because of his passion and determination to make the brand the unquestioned leader in luxury cars. He spoke to DNA :

On slowdown affecting BMW in India
Yes, we have felt the slowdown just like any other carmaker. Last year, we sold 2,908 units, which was slightly less than the target of 3,000 units because of market decline between October and December. But this year, we expect the overall luxury car market and our share in it to grow. Till April this year, we sold 1,232 units, which is somehow in the corridor of our expectations. We hope a revival will become evident in the market from the second half of this fiscal.

However, we have not revised downwards any targets and continue to prepare for the upswing that follows any slowdown. So opening new dealerships, launching new products... everything is happening as planned.

On expanding BMW’s footprints
We will be setting up 10 new dealerships across tier II towns such as Coimbatore, Jaipur, Ludhiana and Bhubaneshwar by 2010 end. On the products front, we have already launched news 3- and 7-series vehicles besides X6 and 2l diesel X3. Now, the Z4 sports coupe is slated for launch by October.

On sales mix and BMW’s customer profile
Almost 80% of our cars are assembled in India while the remaining 20% are imported. Of the 80% assembled here, 55% are 5-series and the remaining 45% are 3-series. This, despite the 3-series being priced lower. I think lifestyle is becoming a big consideration for most customers. So typically, we find the 3-series being bought by youngsters who drive themselves most of the times whereas the 7-series is bought by more mature people, senior businessmen who usually prefer to be chauffeur-driven. 

On how BMW has been able to speed past Mercedes in 2009
Our ‘funnel strategy’ must have worked! Despite warnings to the contrary, I decided to establish dealerships based on our global benchmark in India because they offer the customer his first point of contact with the BMW brand. All our dealerships are world-class. Then, we launched BMW Financial Services in 2007, which offers car financing as well as insurance. This helps the customer get a single-point contact for purchasing our cars and get the BMW assurance. Then, things like offering up to four tyre replacements in one year, having a dedicated car recovery truck at each dealership, etc, are some of the other factors which led to BMW brand loyalty. We have consistently stayed ahead of competition in India between January and April this year, and the challenge now is to maintain this lead through 2009.

On discounting in the luxury car segment
Yes, discounting happened over the last few months and is still happening but not only by us. Customers began to look for deals and though we didn’t drive discounts, dealers had no option but to offer some discounts because of the market situation. We don’t believe in discounts but BMW alone cannot change this... on our cars, discounts of Rs 1-2 lakh may have been given.

On investments till date and plant capacity
We have invested $30 million till now in our own infrastructure and the manufacturing capacity at Chennai was increased to 3,000 units per year in 2008 on a single-shift basis. We have no plans to raise it further unless the market improves.

On plans to bring BMW bikes and the Mini
The motorcycle teams are always studying the Indian market but no immediate plans to bring them to India. We don’t think superbikes have a market in this country yet. As far as the Mini is concerned, we will evaluate this option again by 2009-end. If it is brought to India, then it will only be in completely built unit form. So, obviously the price tag would be over Rs 20 lakh. The Mini is a brand by itself and would require separate showrooms to be set up, which means significant investment from the dealer’s end.