BMW to invest ₹120 cr this year, launch new 5series to rev up India operations
MUMBAI: The Indian unit of German luxury carmaker BMW plans to invest ₹120 crore in 2017, launch the new generation 5-Series sedan, and expand its dealership network to recover ground it had ceded to rivals over the last four years, said Vikram Pawah, president BMW Group India.
One of the earlier entrants in India’s small but competitive luxury car market, BMW lost its leadership position first to Audi in 2013, and then to Mercedes in 2015, which currently leads the segment.
Pawah is now counting on the launch of new models such as the new 5-Series and the goods and services tax (GST), to make a strong comeback in a segment that accounts for less than 2% of India’s passenger vehicle market. BMW’s sales in India rose 9% to 7,500 units in 2016, after four straight years of sales decline.
Puneet Gupta, associate director at sales forecasting and market research firm IHS Markit, said, while last year’s growth was positive, the sales volumes were still less than what it was in 2011.
“They have a lot of catching-up to do.”
But Pawah, who completed five months in his role last month, is not worried and calls it a well-thought-out strategy. While the years between 2007 and 2009 were about building a strong foundation to secure its future in India, from 2010 to 2012, it focused on growth and achieving leadership in the luxury car segment and from 2013 till 2016, it consolidated its position with a clear vision of sustainable growth and profitability, he said.
The local arm of the Munichbased BMW presently has 63 touch points which includes 41 sales outlets and plans to raise the number of such outlets to 50 by the end of the current calendar year. It also plans to increase the number of mobile showrooms to 80 from 30 now.
After the new generation 5-Series, which is set to go on sale on 29 of this month, the company plans to bring 6-Series Grant Tourismo (GT) in 2018. One out of three cars sold by BMW in India is a 5-Series. Therefore, Pawah is betting big on the new generation model for sales ramp up.
In the five months to May this year, BMW sales rose 8% to 3,533 units from a year earlier.
Pawah expects GST to add further heft to the volume recovery in a market that has been subdued for the last three years. Sales of luxury cars — those priced between ₹25 lakh to ₹2 crore fell 4.24% to 33,279 units in 2016, the first fall in four years, as per IHS Markit.
Under the current duty structure, a buyer of a luxury car or any other big car, including SUV, pays a total duty of up to 55%. With the maximum cess on luxury cars at 15%, and with a GST rate of 28%, the maximum duty one is likely to pay is 43%.