BMW to conduct feasibility studies for MINI

BMW India will kick off a feasibility study on its Mini brand to ascertain its viability for India and should this initiative indicate a market for the brand, the Mini could well be seen on India's roads in 2009.

This announcement was made by Peter Kronschnabl, President, BMW India at the inauguration of the company's plant on the outskirts of Chennai at the end of March. The plant in which BMW has announced an investment of approximately over Rs 100 crore (Euro 20 million) was inaugurated by BMW Chairman Norbert Reithofer and its Head of Engineering, Frank-Peter Arndt.

The company is also evaluating the possibility of setting up an International Purchasing Office, Kronschnabl said. A decision on this is expected by the end of May, he said. 

In his opening address, Reithofer said India's market for premium cars is expected to double between now and 2015 and that ‘the company wished to benefit and contribute actively' to this.

BMW India’s new unit at Chennai covers an area of 89,000 square metres with a third of that allocated for production activities. The BMW 3 series as well as 5 series will roll out from this plant, with the latter slated to start from May.

Kronschnabl said the company aims to sell an estimated 1200 units of the cars utilising one shift in the first year with the figure going up to 1500 in 2008. Over 90 per cent of the sales in India would be the locally assembled cars, with the 7 series and X Series SUVs, which will be imported, primarily accounting for the rest. For the cars assembled in India, the model mix is expected at 50:50, he said.

The Chennai plant has a capacity to manufacture 1700 cars a year on a single shift basis. Kronschnabl said the launch of assembled cars in India is the German major's "market-entry strategy". The models to be manufactured at Chennai are the 3 Series — 320i, 325i, 320 diesel — and the 5 Series — 520i, 523, and the 525 petrol and 525 diesel. 

China strategy

In China, the company has in place installed capacity for 30,000 units but has been able to better market growth with sales of 40,000 units, inclusive of the Mini and Rolls Royce brands. At the global level, the BMW management is now considering whether or not to add more capacity in China, where it has an alliance with a local player,Brilliance.

In his opening remarks at the inauguration of the BMW unit at the Mahindra World City Industrial Park, BMW chairman Reithofer said local presence is a must for long-term success in market, which is why the company has established a unit at  Chennai. The choice for Chennai was motivated by the fact that the area has the right infrastructure, suppliers are located nearby and well-trained people can be recruited.

The Indian operation is BMW's most recent subsidiary. Apart form India, BMW has subsidiaries in Europe, the US and in Asia, which has become an important market for the company in the last few years. Sales in Asia in the last calendar were 136,000 units for all three brands, which is expected to exceed to 150,000 units by 2008. Reithofer said Asia is the mainstay of the company’s global business and that India was an important step in the growth plan for Asia.

Reithofer elucidated the steps that BMW takes when it establishes operations in a market. While CKD is the first step, it then adds a body and paint shop, then opens a purchasing office for local products, then sources for its operation back home and in other developed countries and finally sets up a full-fledged plant with procurements and R&D functions.