Blog: Dave LeggettMini in India

Dave Leggett | 11 April 2008

I gather that when Mini debuts in India, it will concentrate on sales in the capital Delhi and India's commercial centre, Mumbai (Bombay) and leave the rest of the country alone. A formal decision on introducing the brand to India is expected to be taken next month (a foregone conclusion if ever there was one). Peter Kronschnabl, president of BMW’s local unit, has said Mini sales in India would be in the 'low hundreds'.

Analysts estimate that New Delhi and Mumbai alone account for 20% of passenger car sales in India. So, fair enough, dip the toe in there and see what happens.

It sounds cautious. But I reckon local assembly of Minis in India must be being seriously considered further down the road. Here's how it might work.  

First you introduce the car, fully built-up imports, at low volume and build the interest in the market. Ramp it up ever so slightly when that initial wave of interest and successful dealer network is built up. Also, there are long waits for customers - a good thing - and the high price point for a small premium segment car is fully accepted. First base.

Then and only then, gradually extend distribution to other cites and start local assembly to avoid India's high import tariffs on BU imports. That would be in a few years after market entry. By then the luxury brand and image are sufficiently robust to withstand local assembly. It's an English heritage brand, kits coming in from Oxford, with helpful German connections and it is also made locally. That's a heady mix for India - the latter element able to live happily with the others by then.

The big tariff reduction immediately translates to a higher profit margin given the already established high price point; and there's also the benefit that local assembly eases tight capacity at the Oxford Mini plant. Oh, and Indian manufacturing capacity is lower cost than that at Oxford.

For now, BMW/Mini execs will insist that Minis will only ever be made in Oxford. But BMWs are assembled all over the world - including in India at a plant in Chennai (Madras). The strategy just has to be executed with care and with no rushing. In this case, excess demand for the product and a bit of short-supply is an integral part of the plan. It would be disastrous for Mini's premium values not to be properly developed at the very beginning in India.


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