BMW AG on Wednesday (2 November) confirmed it will establish a vehicle assembly and sales subsidiary unit in India though it is unclear whether the local production operation will use semi-knocked-down (SKD) or completely knocked down (CKD) kits.
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Citing BMW sources, just-auto reported exclusively last month that the company would establish a CKD assembly facility in the country, subject to final board approval.
“Apparently SKD is not our aim here but we will not be releasing any further details on the CKD process until nearer the opening of the plant,” a BMW spokesman told just-auto.
Sales operations will be based in the Delhi area while the Munich-based car maker will build an assembly plant in Chennai in southern India. The present dealer network handling a small number of fully imported cars will be expanded to all major metropolitan centres.
In a statement, BMW said the opening up of the Indian market is an important step in the company’s expansion plans in Asia.
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By GlobalData“The Indian automobile market offers significant growth potential in the long term. With our increased presence there, we will be well positioned to fully tap into this potential”, said BMW chairman Helmut Panke.
The company is targeting annual sales of 150,000 units of its BMW, Mini and Rolls-Royce branded cars in Asian markets by 2008. In fiscal 2004, the company sold 95,482 units in the region.
The Indian production and sales subsidiary will be owned 100% by the BMW group and will commence operations at the beginning of 2007. The initial investment is EUR20m.
The plant will assemble BMW 3 and 5 series sedans, with Indian production intended solely for the local market. The car maker has not announced plant capacity or volume forecasts but just-auto has learned that it regards 1,000 units a year as the mimimum for a viable CKD plant.
In addition to operating the assembly plant and importing BMW cars, the new subsidiary company will also develop the dealer organisation, determining pricing and product strategy, as well as handling marketing and aftersales.
In the medium term, the company will employ around 200 people in India, with up to 600 additional jobs being created in the dealer and service network.
BMW is currently represented by two dealers with three outlets in the Indian market.
In the 2004 financial year, the company delivered just 122 BMW brand vehicles through this network though, in the first half of 2005, deliveries increased to 100 units.
BMW said that, due to the high growth potential, it hoped to multiply its annual sales volume with its official factory-backed entry into India.
Adding an assembly plant in India will give the BMW Group 23 production locations in 13 countries, while the new sales subsidiary will take the number of ‘factory shop’ international sales subsidiaries to 35.
A network of national importers serves another 120 countries, giving BMW what it claims is “an unmatched international production and sales network in comparison with its competitors”.
BMW is already in almost all the strategic countries in Asia, with representation in Japan, Indonesia and Malaysia (where it has had CKD assembly plants for decades), South Korea, Thailand (the assembly plant there will soon supply AFTA markets) and the Philippines with its own sales subsidiaries.
In China, the group has a production and sales joint venture for BMW cars.
The Asian importer markets are managed from the BMW Asia regional office in Singapore.
From 2006 a design studio will also be set up in Singapore.
Malaysia forms the logistical node for BMW in Asia, with an IT centre and a parts distribution centre.
