India’s luxury car market is becoming more interesting by the day as the three German brands, BMW, Mercedes and Audi, further firm up their plans for this market with a series of new model launches and plant upgrades that could see BMW’s Mini back on the local agenda.
The premium car segment crossed the 15,000 mark for the first time last calendar year with BMW emerging as the biggest player.
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“We control 40% of the Indian luxury car market and will likely retain our position in 2011,” BMW India president Andreas Schaaf told just-auto at the local launch of the Vision Efficient Dynamics concept.
India’s luxury car market has experienced robust growth in recent years and BMW has revised their estimates higher. “We couldn’t comment on the likely figure but our ultimate dream is to touch the 10,000 mark,” Schaaf admitted.
The BMW KD assembly plant in Chennai currently can build 10,000 units a year with a single shift. When asked what share BMW aspired to to by 2020, Andreas said: “The Indian luxury car market is estimated to increase 10 times to around 150,000 units annually and, at a conservative level BMW will have a share of 35-40%.” At 35%, that’s over 52,000 cars that must be assembled and/or imported. The automaker sold 2,927 units in the first four months of this year.
just-auto has learned from reliable sources BMW plans to upgrade Chennai in the next couple of years.
“We do not intend to stick to CKD [assembly] operations in India. India is regarded as a key market and we always think that CKD operation is a temporary model. Once the luxury segment reaches a certain level we will take the decision to upgrade it to a full-fledged [manufacturing] operation,” Andreas said.
[That’s something Volkswagen has already done in India (and Russia) where local operations now include panel pressing – ed].Following recent Indian government changes in CKD definition in the last budget, luxury car makers have to achieve a greater degree of localisation. A CKD vehicle unit now attracts 10% import duty if the engine is assembled in India, or 30% if the engine is imported in the kit. CBUs are levied a 60% tariff. Therefore, the luxury car makers are gearing up their CKD operations to assemble engines in India in the next couple of years otherwise they would attract higher import duties that make their cars expensive and uncompetitive.
With the growing fortunes of the Indian market, Indian upgrades are discussed twice a year at board level at BMW headquarters in Munich.
just-auto has also learned BMW is considering bringing Mini to India at some later stage. But it’s arrival time has not been confirmed.
“We dropped the idea of bringing in Mini for the India market few years back. But the way this market is shaping up, the idea is again at the discussion level,” Andreas confirmed.
