In­dia shouldn’t pre­vent top tech from com­ing in: BMW head

Business Standard - - COMPANIES - PAVAN LALL Mum­bai, 15 Oc­to­ber

Six months af­ter BMW In­dia trag­i­cally lost its coun­try head Ru­dratej Singh to a health-re­lated fa­tal­ity, Vikram Pawah, its new pres­i­dent, hopes to put the com­pany back on track with the launch of the 2 Se­ries, its en­try-level sedan for the sub­con­ti­nent.

In the lux­ury-car com­pany’s first in­ter­ac­tion in close to a year, Pawah, who is pres­i­dent of BMW Group In­dia, Aus­tralia and New Zealand, and who had also run the firm ear­lier, dis­missed the spec­u­la­tion that BMW was de-pri­ori­tis­ing In­dia as a se­ri­ous mar­ket for its cars by de­fer­ring over­all charge to an ex­ec­u­tive also run­ning two other mar­kets from out­side the coun­try.

“We went through a cri­sis ear­lier in the year but In­dia is a pri­or­ity and the (man­age­ment) board has made it clear that it re­mains a fu­ture growth mar­ket for BMW,” Pawah said. The com­pany will, as part of its prod­uct roll­out, launch the lat­est 5Series and the 6-Se­ries GT in 2021.

“BMW will ini­ti­ate its plug-in hy­brid vari­ants, start­ing with the X3 SUV, which will also come in diesel and petrol,” Pawah said. “Our model line-up will be ag­gres­sive for next year and will lead the way,” he said.

“World­wide the com­pany is plan­ning to launch around 25 elec­tric prod­ucts by 2023.”

In the re­cent past, BMW ran pi­lots in the coun­try with i3 elec­tric cars in var­i­ous metro cities. The com­pany has been study­ing the fea­si­bil­ity of sell­ing them here.

De­spite lux­ury car­mak­ers op­er­at­ing in In­dia for the past two decades, with brands like Audi, Mer­cedes-benz, Jaguar Land Rover, and Lexus sell­ing their prod­ucts here, the vol­umes have been small, with the seg­ment be­ing less than 50,000 units. In com­par­i­son, the pre­mium car seg­ment is at least 18 per cent of the car mar­ket of over 1 mil­lion units in Aus­tralia. Part of the rea­son for this is the high rate of taxes.

In In­dia as ex­am­ple, the new 2 se­ries, which has been launched, costs ~39 lakh against around

~24 lakh in the US and that’s the gen­eral price dif­fer­en­tial between prices in In­dia and abroad for most lux­ury mod­els.

“We should def­i­nitely be at­manirb­har but one shouldn’t pre­vent top tech­nol­ogy com­ing to In­dia, ei­ther, and we would ap­pre­ci­ate lower taxes,” Pawah said. “The mar­kets are be­ing dis­torted, bur­den­ing In­di­ans with ex­ces­sive prices when they should be al­lowed to drive the lat­est the world has to of­fer.”

BMW sources com­po­nents in In­dia, and runs a fi­nan­cial ser­vices divi­sion, a parts ware­house, and a man­u­fac­tur­ing fac­tory in Chen­nai with a man­u­fac­tur­ing ca­pac­ity of around 14,000 units an­nu­ally, Pawah added.

Kaushik Mad­ha­van, vice-pres­i­dent, mo­bil­ity, Frost & Sul­li­van, said ~39 lakh was pricey for a car and ear­lier its other en­try-level car, the 1 se­ries, which was even cheaper, hardly drove any vol­umes and was dis­con­tin­ued. “If you look at the dealer and net­work reach that lux­ury play­ers have, it has al­ways been metro and big cities but there is a re­al­i­sa­tion that up­coun­try mar­kets with cash rich-cus­tomers in Tamil Nadu, Andhra Pradesh and more have greater buy­ing po­ten­tial for the fu­ture,” he said.

“Sat­u­ra­tion hap­pens and then you’re de­pen­dent on the re­place­ment mar­ket in the next four years, which is lim­ited right now in metro cities.” This year, the pas­sen­ger car mar­ket is likely to end with vol­umes down 20-25 per cent, ac­cord­ing to a re­cent re­port by ICRA.

While the costs of own­er­ship for all lux­ury cars have his­tor­i­cally been high, Pawah said BMW av­er­aged between ~1 and ~1.50 per km for that cost, mak­ing it more af­ford­able than in the past.

Like most com­pa­nies, BMW In­dia had a de­cent first quar­ter but sales slumped af­ter March, when the pan­demic hit. Floor traf­fic and in­quiries in­creased from July but BMW’S man­age­ment is bet­ting on a re­cov­ery to be driven by the fes­tive sea­son as well as grow­ing de­mand for per­sonal mo­bil­ity and life­styles that lean to­wards driv­ing hol­i­days, Pawah said.

“IN­DIA IS A PRI­OR­ITY AND THE (MAN­AGE­MENT) BOARD HAS MADE IT CLEAR THAT IT RE­MAINS A FU­TURE GROWTH MAR­KET FOR BMW”

VIKRAM PAWAH Pres­i­dent of BMW Group In­dia, Aus­tralia and New Zealand

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