BMW To Source Auto Parts From India

Like several other global auto majors, German luxury automaker BMW will source auto components from India. The company will set up its international purchasing office in New Delhi to procure its worldwide ancillaries requirement.

"We will be setting up an international purchasing office which will be headed by an expatriate to take care of sourcing components for BMW's global operations," BMW India President, Peter Kronschnabl, said last Tuesday. Kronschnabl added the proposed international purchasing office will become operational by August this year and will be independent of the company's purchase unit at Chennai that caters to its India operations.

Kronschnabl added, “Once the sourcing team comes to India, they will study what kind of components to be sourced from here.” BMW India's purchase unit and the international purchasing office are designed to work individually, in tandem, or in group to create the most feasible approach depending on products. He declined to take a call on the quantum of components that BMW was looking to source from India saying that it was too early to comment. He did not reveal outsourcing targets, but did say that some IT components are being sourced from India.

Kronschnabl added a study is on to find out the feasibility of launching the Mini. Despite it being a “small” car, the Mini would not come cheap - at home in Germany, it costs around Rs 10 lakh, so imports into India as CBU would inflate its price to Rs 18-20 lakh range. The same is the case with the 7-series cars, which are also in the super premium bracket.

The locally assembled 3-series, conversely, is priced between Rs 26.7-32 lakh, whereas for the 5-series would cost Rs 37-42 lakh. The 3-series will still be equipped with cutting-edge features like the improved BMW fuel filter, engines, and radiator plus its enigmatic aura.

The German automaker had revised its sales target for 2007 in anticipation of the positive response to its recently launched 3 Series sedan from the Chennai plant. The sales figure had been revised from about 1,000 cars initially to 1,200 units in India in the calendar year as the company planned to roll out its `5 Series' models from the Chennai plant by June, Kronschnabl said.

BMW has marked 2007 as the ‘Year of India’ across global operations, and not without reason. The European major has set up an assembly plant at Chennai from where it produces the 3-series and 5-series sedans, committing €20 million investment in the process. But more ventures are on the way.

“BMW is focused on India and we think this market has very good potential. We are evaluating India for our Mini and 7-series cars at the moment. With the premium car segment expected to grow at a healthy rate, we are looking at expanding BMW’s presence here,” Kronschnabl noted. BMW is now thinking of ramping up component sourcing from India as it evaluates the market feasibility for its famous Mini and 7-series cars.