After leading the luxury car market for four consecutive years since 2009, BMW is likely to be crossed by both German rivals, Audi and Mercedes-Benz, this year. But Philipp von Sahr, president of BMW Group India, says he was never in the rat race — his focus is squarely on profitability. In the first nine months of 2013 (January-September), industry estimates put BMW’s volumes at about 6,000 units (the company does not officially report sales data), while Audi’s volumes are up 15% at 7,391 units and Mercedes is up 31% at 6,461 units.
“I have never thought of reaching 10,000 unit mark or not. For us it’s not the volume, it is really the brand. You have not seen any advertising from us last year that we were number one, or a picture of the CEO opening a bottle of champagne,” he said in a candid conversation with FE.
Von Sahr admits that recent price rises on the back of a weak rupee has affected demand. “This is a difficult year, especially with the weak rupee. Our sales have come down, so we have reacted with two price increases in the year, one in January and one in August, and the competitors followed us. To be honest that makes it more expensive to buy a premium car, so the premium manufacturers are also affected by the economical situation, though maybe not to the extent as volume manufacturers because price sensitivity is not as high in the luxury segment. But we had to increase prices for profitability, so that we can further invest in new cars,” he said.
To increase its market coverage, BMW has launched the 1-Series last month, its new entry model that will target an entirely new set of buyers. “This car has a strategic job —it is our first car in the luxury compact segment and here every customer is a luxury conquest customer. We want to get upward moving people, young achievers who maybe drove a car from a high-end volume manufacturer and now wants to come into the BMW world. That’s a much tougher task for salesmen to convince such a guy than to have a happy 5-Series customer buy it for third time,” von Sahr said.
While the company plans to launch the new Z4 roadster next month, followed by the 3 series GT around the Auto Expo next year, the next big thing would be the launch of the ‘I’ brand of premium electric cars next year which is currently in the works. At present, there are two models shown globally, the i3 electric hatchback that is priced at 35,000 euros (R29 lakhs) and will go on sale next month in Europe and North America, and the i8 hybrid sports car that will hit the roads next year.
“Mr Praful Patel (heavy industries minister) was in Frankfurt recently and drove the i3; he was very excited. BMW has three brands, one is the main range, then sporty is ‘M’ and the innovative line is ‘I’. In ‘I’ we not only have the i3 and i8, but mobility innovation like car sharing. Of course, we will launch the i3 in India, but we will decide on the product line,” he said.
BMW is investing R210 crore by end of 2013 on a new assembly line at its Chennai plant that will not only increase annual capacity from 11,000 to 14,000 units but help it make more models and variants locally. The plant assembles 8 of the 14 variants that BMW and Mini sell in India.