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The BMW Group has said that it may set up a second plant in India by 2015, in case the demand for luxury cars in the country continues on a similar growth trajectory as was seen in 2010.
In 2010, BMW's sales rose 73 per cent to 6,246 units, even as the luxury car market grew close to 80 per cent at around 18,000 units. The company currently has an assembly plant in Chennai where it has raised the annual capacity to 10,000 units (from 8,000 units) this month. The company is also increasing its investments to €30 million in 2011 and 2012, from the current €17 million.
“If we see similar growth as last year for the next few years, we could need a new plant by the middle of the decade. We will look at all possibilities, including full manufacturing and not only CKDs. By 2020, we could possibly be selling more than 40,000 units. However, it is not feasible to make an engine plant in India,” said Mr Frank-Peter Arndt, Member of the Board, Production, BMW Group.
At present, BMW has 25 plants worldwide, (including motorbikes), of which only eight manufacture cars while the rest assemble from CKDs.
May assemble X3 in Chennai
Mr Andreas Schaff, President, BMW India, however, said that the company has land available at Chennai, where it may first look to put a second assembly line. “The current plant can't take another assembly line, but we have adjoining land available. CKD is only a temporary model to develop the market. But we cannot speculate as to when we'd have enough volumes to start full manufacturing,” he said.
The German premium carmaker, which has led the luxury car market for the last two years, also announced plans to add local assembly of the X3 SUV by middle of this year at its plant. At present, it assembles the 3, 5 series and the X1 in India, while others models such as the X3, X5, 7 and 6 series, are all imported as fully built units.
“Our next important decision is to bring the X3 assembly into India by the middle of this year. The Mini brand also has very interesting products for India, though there's no decision on it at the moment,” said Mr Arndt.
Speaking at the Group's Annual Accounts Conference, Mr Ian Robertson, Board Member for Sales and Marketing, BMW, said that the company would double its dealership network in India to 40 by 2012.
Asked how BMW will be affected by the Government's recent proposal to increase import duty on cars imported as CKDs which have pre-assembled engines to 60 per cent, he said that the company, along with other carmakers, is seeking further clarity on the matter from the Government. More details are expected in the next few months.
The Group expects to sell 1.5 million units across the BMW, Rolls-Royce and Mini brands globally this year, up from 1.46 million in 2010. The BMW Group globally posted a net profit of 3.23 billion euros in 2010, on revenues of 60.5 billion euros.
Though Europe was the Group's biggest market last year, followed by China and the US, the company is optimistic of growth from emerging countries such as Brazil, India, Russia, South Korea and Turkey, said Mr Robertson.
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