BMW would look at increasing localisation

Source: Business Standard, Oct 15, 2015

Chennai: Luxury car maker BMW said that it would look at increasing its localisation to full fledged manufacturing depending upon the volume of sales. The company, in a long term, would also look at possibilities of exporting from India, said Philipp von Sahr, president, BMW Group India.

Speaking to reporters after launching the BMW M range of cars – BMW X5M and BMW X6M – Sahr said, “We make now the step from assembly to more or less fully fledged production. The last step would be the paint and body. Making this in India makes sense when there is much more volume there, but it will come – sooner or later. I cannot say when, but we are prepared to do so.”

BMW

As part of the company’s localisation strategy, it has now localised engines, gearboxes, dash boards etc and now has a localisation of 50%. This gives the company much flexibility and profitability for the future. It is required to have a volume of around 30,000-40,000 cars to make sense for the company to have a fullfledged plant.

The company has already been making investments in the country, with a total of around Rs 490 crore invested so far and Rs 640 crore into financial services.

The facility in India is able to produce eight diferent BMW models in Chennai, which is more than any other competitor in India and also more than every BMW plant in the world. The Chennai facility currently has a capacity to manufacture around 13,000 units and it would require some investment if the manufacturing has to go up.

The Indian market and economy are much more stable. Lot of emerging markets like Brazil, Russia and China are suffering and of all these markets, India is the most stable economy. This helps the company in making the long term planning here.

“We also expect long term growth to come in next years, though there could be one or two years of volatility, but in long term it will be a growth. That makes the company easy to think about long term investments,” he added.

While he refused to give out any sales figures for 2015 and expectations from the new products launched on Thursday, Sahr said that the company is optimistic about the growth in near future. The worst period which was there for the last two years is over and the company see growth in future, he added.

The company is not looking at volume game and would stick to providing high quality premium cars for its customers, he said.

Speaking about the new products, he said that the BMW X5M and BMW X6M would be completion of 14 launches of its products this year and there would be one more launch from BMW this year. It may be noted that the company has earler announced that it would launch 15 models this year in India. However, he did not comment on the target for next year launches.

The two cars launched today are high-performance sports cars with tough off-road characteristics of the BMW xDrive and power delivery capabilities of the M range of BMW vehicles. The completely built-up (CBU) units of BMW X5M is priced at Rs 1.55 crore while BMW X6 M is prices at Rs 1.6 crore ex-showroom.

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