Date:
02 Jul 2015
| Author: Rahul Kapoor
The BMW Plant Chennai started
operations on March 29, 2007. The BMW Plant Chennai locally produces the BMW 1
Series, the BMW 3 Series, the BMW 3 Series Gran Turismo, the BMW 5 Series, the
BMW 7 Series, the BMW X1, the BMW X3 and the BMW X5. Headquartered in Gurgaon
(National Capital Region), BMW India is a 100 pc subsidiary of the BMW Group.
Till date, BMW Group has invested over Rs 490 crore (€ 69 million) in BMW
India. The wide range of BMW activities in India include a manufacturing plant
in Chennai, a parts warehouse in Mumbai, a training centre in Gurgaon NCR and
development of a dealer organisation across major metropolitan centres of the
country.
With 50pc localisation
of your products, where does this put you from where you were to where you are
now and what do you expect from the future?
We increased the localisation by local production engines,
gearbox, wiring harness, cooling modules and more with partners like Force
Motors and so on. Since the month of January 2015, we now have a localisation
of 50pc which was at a level of 20pc earlier. In the future we will absolutely
go in the same direction with more localisation because the BMW philosophy is
that "Production always follows the market". The long term outlook
for the Indian market is very positive, also for the premium market. That
means, automatically that we invest more into the future to the plant in
Chennai and also into localisation.
Let’s talk about the
engines from Force Motors. How have you developed the engine in partnership
with Force Motors and how much input has come from BMW to make the engine up to
BMW spec?
It’s a cooperation with Force Motors. Force Motors is very
experienced in producing engines for premium manufacturers so they know what
the quality approach is. On the other side, we have our experts from the plant,
the technology guys from 'Sheer Driving Pleasure'. They met together with Force
Motors and created a very fast and very positive development project starting
last year so they had a lot to do. The result is that now we have a 2.0 lltre
diesel engine which is a benchmark in its class and the 3.0 litre diesel engine
is also on its way so it’s all looks good.
Is this venture with these
suppliers a joint venture or just a supply chain? Are you forming a new company
with any of the companies?
At the moment it’s only a supply chain. We have this system
all over the world. If you see of example, the first generation of the BMW X3
was produced outside the BMW production world and was a huge success. So of
course we from the BMW Group ensure that the quality is right and the car meets
the 'Sheer Driving Pleasure' measures in it. We have some really good partners
in the production world who can produce these products very efficiently while
keeping the standards of top BMW quality.
With localisation,
how will the end consumer benefit from this? Can we also expect the prices to
significantly drop for all localised cars in India?
Indirectly yes. We will not decrease the price because of
this. But if you see, India is an emerging market with a high inflation rate.
Normally we have to increase the prices of our cars three to four times in a
year. Now with the localised parts, we don't have that pressure any more,
increasing the prices one or two times will be sufficient.
What’s been your
experience with BMW India business since you came into the country??
When I started in September 2012, to be honest the premium
market was in a lousy condition. Profitability for any of the manufacturers was
not there, the prices were raised month, by moth, by month. There was high
stocks and low contribution margins for the car. All the sales were pushed day
by day in the newspapers with 2012 cars at 2011 prices or whatever. This was
poison for the premium manufacturer. So
we decided to go out of these ways and look for profitability by investing in
our dealerships and making localisation investments. It’s only possible if you
make a good business case all over. A customer has to pay a lot to buy a
premium car in which he wants quality, with perfect service and customer
orientation and so we invested in dealerships.
The 1 series hasn't
quite made its mark in India. In that segment, a sedan is what the buyers seem
to prefer. Do you plan to close up the gap with a 2 series just to cover the
segment?
Of course we have a lot of models in the BMW line up that we
don't offer in the Indian market. On the other hand we offer eight different
Chennai produced cars which is a lot more than our competitors. Like I said,
when the premium market was not profitable, we obviously withdrew some models.
You don't need five different models, maybe two is enough. Also you have to
look at every car, does it make business sense--Can we produce it here? Can we
bring it? In the long term I see growth in the SUV market than in the sedan
segment. Both are major markets for BMW in India, but the SUV market I predict
will be seeing more growth in comparison.
You plant to launch 15
models this calendar year. Could you tell us which ones?
We have already launched the i8 and the 6 Series Grand
Coupe. We plan to launch the new X6, X6M, X5M, lifecycle improves of 3 series,
1 series, X1, M6 Grand Coupe, X5 M-sport version and some more.
How much have you
invested into India and how much is more in the pipelines?
Now we have invested a total of 4.9 billion Indian Rupees.
Because India is an emerging market, I promise you we will invest further, but
how much we don't know yet.
Are you also planning
to expand your dealer network?
We have a target to increase our dealer network by 15pc by
the end of this year.