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BMW to invest Rs 130 cr in India, will launch new version of the 5 series this month

The company will launch the new version of its locally manufactured 5 Series later this month and 6 Series Gran Turismo (GT) model next year to strengthen its product portfolio in India
PTI New Delhi June 19, 2017 17:02 IST
PTI

German luxury carmaker BMW is investing another Rs 130 crore in India to enhance operations, taking its total investment in the country to Rs 1,250 crore.

The company will launch the new version of its locally manufactured 5 Series later this month and 6 Series Gran Turismo (GT) model next year to strengthen its product portfolio in India.

"Since 2007, we have been consistently investing in India. This year, we are going to increase our investment further to up to Rs 1,250 crore on a cumulative basis," BMW India President Vikram Pawah told PTI.

BMW has invested Rs 1,120 crore in the Indian operations so far.

The new investment will go into BMW group operations, including Motarrad (two-wheeler business) as well as the financial services arm, he added.

With the fresh investments, the total investments on BMW group operations in India will go up to Rs 520 crore and on BMW Financial Services to Rs 730 crore.

The company is looking to expand its dealer network in the country. It currently has 18 partners and is present in 30 cities.

"Besides, we have 63 touch points. Out of these, we have 41 sales outlets. So we want to take these 41 outlets to 50 by 2018," Pawah said.

In other emerging towns, in addition to 30 major cities, the company utilises its 'Mobile Studios' to expand the market further.

This year, the weather proof BMW mobile studio will cover 50 towns, Pawah said.

On new product launches, he said: "As part of our power to lead strategy, product offensive starts. In next two weeks, we will be launching the new 5 Series."

The model has played a big role in the success of BMW in India. Since 2007, the company has sold around 66,000 vehicles in India with 5 Series having contributed close to 30 per cent of the total sales.

"Next year, we will be introducing another model in between 5 and 7 Series, called the 6 GT and that would again define a new segment and create new market for us," Pawah said.

On local manufacturing, Pawah said: "We are locally producing eight of our total 16 models that are available. So as we introduce new models, also the new 5 Series, will be produced in the Chennai plant."

The 6 GT would also be manufactured locally, he added.

"So all our main volume drivers as we call them will also be produced locally. Niche models will continue to come in CBU form. As the volumes increase we will continue to evaluate as what can manufactured locally," Pawah said.

The company's Chennai plant has an installed capacity of 14,000 units on a single shift basis. It started operations in March 2007 and currently produces BMW's 1 Series, 3 Series, 3 Series Gran Turismo, 5 Series, 7 Series along with SUVs X1, X3 and X5.

When asked about competition with its German rivals Mercedes and Audi to be the number one player in the luxury car market in India, he said BMW's focus is to remain the fastest growing premium car brand in India.

In the January-May period this year, BMW has sold 3,533 units in India at a growth of eight per cent.

Pawah further said the company would be focusing on its power to lead strategy to grow the entire premium car market.

"The idea is to grow the segment. Currently in India, premium car segment remains less than two per cent of the total passenger vehicle market (3 million last fiscal) as compared to five to 10 per cent in various countries," Pawah said.

The efforts should be to at least make it five per cent and and eventually 10 per cent of the PV market, he added.

The premium vehicle segment is estimated to be around 35,000 units per annum currently.

 

Difficult to popularise green cars without govt support: BMW

Disappointed over plug-in hybrids being ignored for incentives in the upcoming GST, German luxury car maker BMW says it will be difficult to popularise green vehicles in India in the absence of government support.

Although the company welcomed the government's idea of going for all-electric vehicles by 2030, BMW said lack of infrastructure and consumer's concerns over getting stranded with pure electric vehicles when charge runs out will be major challenges to overcome.

Under the GST rates, tax incidence on hybrid vehicles will go up to 43 per cent from the current level of effective tax rate of 30.3 per cent.

"When the GST rates were announced, we were disappointed that the plug-in hybrids have been totally ignored," BMW India President Vikram Pawah told PTI.

In a plug-in hybrid electric vehicle, apart from a conventional petrol or diesel engine, there is a large battery that is recharged from an outlet by plugging in thus enabling it to drive extended distances using just electricity.

On the other hand, in normal hybrid vehicle, battery is charged from energy generated from running conventional engine and the range offered on electric drive mode is shorter.

"We would have liked plug-in hybrids to be included as part of the electric vehicles," he added.

Pawah argued that lowering tax incidence on plug-in hybrids can lead to much faster adoption of electric mobility in the country as it would help in addressing range anxiety concerns that customers have.

"If we want to achieve results earlier, then the approach should be plug-in hybrids leading to pure electrical vehicles. That will make transition much easier but with current policies it does not allow us to do that," he added.

He asked the government to look "at plug-in hybrid as equal to electric vehicles for the transition phase" to accelerate movement towards green mobility.

BMW already sells both pure electric and plug-in hybrid vehicles across the world.

While welcoming the government's plan to move towards completely electric mobility by 2030, Pawah, however, cited two major challenges towards achieving the goal.

"One, infrastructure needs to be set up to go purely electric and that will take time. It cannot happen immediately," he said.

The second challenge is the concern among consumers of getting stranded in the middle of the road when the battery charge runs out, he added.

"So the transition to electric mobility from a customer viewpoint would be a bigger hurdle," Pawah said.

The government is working on a scheme to provide electric cars on zero down payment for which people can pay out of their savings on expensive fossil fuels, for becoming 100 per cent electric vehicle nation by 2030.

When asked about the impact of higher tax on hybrids on the company's plans for introduction of green vehicles, Pawah said: "Obviously we will have to wait till infrastructure is set up before we bring in the electric vehicles."

Auto industry has already said that the increased tax incidence on hybrids is against the government's long-term goal of promoting green vehicles in the country.