BMW targets tier-II towns to retain top spot

BMW India is chalking out robust plans to retain its number one position in the Indian luxury car market. Having snatched the top spot from Mercedes Benz a few months ago, it plans to hang on to it by spreading its dealerships into smaller 'tier-II' cities, planning to double in its dealership network to 24 by the end of the year.


The Indian arm of the Munich-based company has indicated that after enhancing its presence in the tier 1 cities, it is now zeroing in on tier II cities like Coimbatore (where it opened a sales and service outlet on Thursday), Jaipur and Lucknow. The company, which currently has 12 dealers in 10 cities, will add 10 more dealers in 10 tier II cities by the end of 2010.

"In the first quarter of the year we have delivered 992 cars, which make us the number one player in the luxury segment. We don't know if we will remain the number one by the end of the year but we are on track to stay there," BMW India president Peter Kronschnabl told reporters at the company's plant in Gurgaon.

He said the company expects each dealer from Tier II cities to contribute about 30-40 cars per year. He added that while the standards of BMW dealerships were the same across cities, those in the smaller cities would have only one or two cars on display.

Kronschnabl, however, declined to forecast the company's sales target for the year stating a clear picture would emerge only after the second quarter.

Asked if the global slowdown has in any way made the firm alter its expansions plans in India, he replied in the negative. "Instead, we are going ahead. We are working at the same pace as before despite the slowdown. While we won't expand production capacity as we have enough, our focus is to expand our sales and service network," he said.

Kronschnabl said financing remains a challenge and sales could have been better had it not been for the difficulty in financing credit purchase of cars. He said currently BMW has tie-up with ICICI Bank for car finance, and "we have also tied up with HDFC Bank as a financing partner from this year".

He also said BMW's global component sourcing from India is going as planned. "We have identified a couple of partners and the next stage is to go for sampling and in the next two years we expect the volumes to pick up."

In the luxury segment, BMW competes with compatriots Mercedes Benz and Audi. According to data from the Society of Indian Automobile Manufacturers, in fiscal 2008-09, BMW sold 3,038 units against 3,537 units sold by Mercedes. However, between January and March 2009, however, BMW sold 992 units to Mercedes' 966 units.

Currently, BMWs cost between Rs27 lakh (320i model) and Rs1.31 crore (M6 convertible). The company recently rolled out an all-new 7 Series sedan priced at Rs93.3 lakh and the SUV X6. It will introduce the new 3 Series sedan and X3 diesel SUV during this year.

Coimbatore foray
BMW India on Thursday opened its Kun Exclusive dealership in Coimbatore. This is a satellite facility of Kun Exclusive, Chennai, the dealership partner for BMW India in Tamil Nadu.

The facility is located on Aerodrome Road near N K Palayam, Ondipudur and comprises a fully equipped workshop and sales outlet at the same location. The facility covers approximately 5000 sq ft and that includes almost 500 sq ft of new car display area. It claims to offer the same standards of sales and service and the same customer experience as any BMW sales and service centre worldwide.

Commenting on the occasion, Owen Riley, director, after-sales, BMW India said, "We are proud to announce that our sales and service facility in Coimbatore is now operational. This facility, in partnership with Kun Exclusive, also initiates phase II of our expansion in India and is reflective of BMW's efforts to connect with customers and prospects across the state to provide high quality services that are at par with international standards."