German luxury car maker BMW is ramping up its localisation efforts in India with over 50 per cent of parts of its vehicles produced at Chennai plant to be sourced from here.
The company, which has lined up 15 new launches this year, has increased its local suppliers to eight from this year from two previously. These include the likes of Force Motors to supply engines and gearbox, Hero Chassis for axles and Draexlmaier India for door panels and wiring harness.
"We have been focusing on long term sustainable profitable growth in India. As we have a strong portfolio of locally produced cars, it is only appropriate that we increase our localisation levels by sourcing more components locally," BMW group India President Phillip von Sahr told PTI.
Currently BMW assembles eight models from its Chennai plant, including its flagship 7 series, 5 series and 3 series luxury sedans. He said the move would not only help the company save cost from high import duties, but this was mainly because of BMW's policy of "production following the market".
"After the course correction we did in 2012-14 period focusing on long term sustainable profitable growth rather than chasing volumes, today we are ready and better prepared for the next step of growing our business here,"von Sahr said.
When asked if this would mean price benefit to consumers immediately, he replied in the negative but said indirectly they would benefit as localisation would help shield the company's products from price increases due to currency fluctuation or inflation.
"Localisation is good for us to do our business profitably that will allow us to invest in our marketing and brand promotion, better service and showroom experience through dealers," von Sahr said.
Elaborating on the company's localisation move, BMW Plant Chennai Managing Director Robert Frittrang said, "For the past one year we have been working on partnering with the right local vendors, which meet our global standards. From January this year we have increased localisation content to over 50 per cent in vehicles assembled at the plant from only 20 per cent earlier."
He said the company had previously only two local suppliers, which has now been increased to eight.
When asked if the company planned to take the numbers further up, he said, "That's the idea but it would depend on the market demand as well as availability of right vendors."
On 2015 outlook, von Sahr said, "We expect it to be better. Already in January we have a double digits growth with 15 launches planned. These include the new BMW M6 Gran Coupe, new BMW M6 Coupe and all-new BMW X5M and BMW X6M."
Last year BMW group had sold a total of 6,812 units in India, as compared to 10,201 units for Mercedes-Benz and 10,851 for Audi.
