German luxury car maker BMW has ruled the roost since 2012, revolutionising the market in the country with its attractive models from BMW MINI to BMW Motorrad’s stable and some of them being manufactured in India. Ever since it entered the Indian market in 2007, there have been more than 70,000 cars on the roads and counting. In the first quarter of 2018, BMW Group India has maintained the momentum with double-digit growth of 11 per cent. Vikram Pawah, president at BMW Group India reveals ‘the most aspirational’ brand strategy for growth during an interview with Michael Gonsalves. Excerpts:
How is the luxury car market in India, which clocked a whopping 18 per cent growth during calendar year 2017, with market leader Mercedes-Benz, BMW, Audi, Jaguar Land Rover and Volvo brands in the descending order, growing and shaping up?
The Indian luxury car market and the customer base have evolved tremendously in the last decade. It is expected to double by 2020. Apart from traditionally wealthy families, the new group of achievers in emerging India has fueled the aspirations for luxury cars. Since entering the Indian market in 2007, we have put more than 70,000 cars on Indian roads.
However, the last few years have not been easy for the Indian automotive industry. We have been continuously confronted with various challenges due to ambiguity and instability in the regulatory framework. Impact of demonetisation, a rushed implementation of new GST regime, stricter emission norms, quick tip of scales towards petrol, and more recently, the customs duty increase on CKD cars along with additional 10 per cent surcharge on luxury cars, all these factors created road-blocks for us.
For long-term success, the taxation regime needs to have a stable outlook. Frequent changes in government policies and tax structure are not viable for business as the realignment involves a lot of effort, time and cost. It has a negative impact on the stability and growth of the luxury automotive industry and also goes against the spirit of ‘Make in India’.
Despite these challenges, BMW Group India has achieved successful growth as a result of its robust strategy of ‘Power to Lead’, a resolute approach in its implementation and absolute commitment to all customers and their needs. We have created a differentiating factor in the Indian luxury car market with the strength of our brands, products and innovative customer initiatives.
Today, BMW India is a fast growing luxury car manufacturer in the country. With our agility and preparedness, BMW Group has delivered its finest performance in India till date in calendar year 2017 with all three brands – BMW, MINI and BMW Motorrad. BMW Group India delivered 9800 cars (BMW + MINI) in 2017, registering a growth of 25 per cent as compared to 2016. MINI led the small-premium car segment in India with 421 MINIs sold in 2017, a growth of 17 per cent as compared to 2016. In the first year of its operations in the country, BMW Motorrad has created a strong appeal among Indian customers, delivering 252 motorcycles.
In 2018 also, BMW Group India has maintained the momentum with double-digit growth of 11 per cent in the first quarter.BMW India sold 2377 cars, clocking a notable growth of 11 per cent. MINI hit the road with 136 cars, a growth of 15 per cent. BMW Motorrad delivered nearly 100 motorcycles (96), creating a strong appeal among customers.
The future strategy for India includes new directions, methodologies and prioritisation to become the most desirable premium automotive brand. How we gear up for the next 10 years will define our future. Although the Indian luxury market is still at a nascent stage, it has immense potential with a population of over a billion. Along with the metropolitan centres, we foresee growth potential amongst the young achievers, predominantly from tier 2 and tier 3 cities.
You were the luxury brand leader in India till 2012, when you lost to Audi, and Mercedes-Benz took over the mantle of leadership three years ago. What are your plans to reclaim numero uno spot in India? You had announced your ‘Power to Lead’ strategy last year. How much has it helped your brand to grow?
With our ‘Power to Lead’ strategy, we have a clear agenda drawn out and at the top is our goal to introduce new products/ segments and increase the overall market size. We strongly believe, that leading the growth of the segment is more important than anything else, even more important than being just number one.
This year, we have already launched nine products. BMW India has increased the excitement in the luxury car segment through the launch of the first-ever BMW 6 Series Gran Turismo, the all-new BMW M5, the new BMW X6 xDrive 35i, the new BMW M3 Sedan, the new BMW M4 Coupe and the all-new BMW X3 SAV. MINI has started a new chapter in its story in India with the launch of the locally-produced all-new MINI Countryman. BMW Motorrad India also launched the all-new BMW F 750 GS and the all-new BMW F 850 GS premium travel endures.
All three brands are further geared up to elevate the excitement further this year with some of the most-awaited launches. 2018 will see the launch of the all-new BMW M2 Competition, which is a compact high-performance coupe and the entry-level model for world of BMW M. The BMW i8 Roadster will redefine green mobility.
In continuation of our strategy to grow market size, we are strongly considering introducing the BMW X4 (Premium Mid-Size SAC) in 2019. The second generation BMW X4 is a combination of X-family DNA with elegance of BMW coupés. Focusing equally on driving dynamics and comfort, it features a sporty design, increased length, width and wheelbase but lower roof for new, more sporting proportions.
MINI India has launched the refreshed versions of the new MINI 3-Door, MINI 5-Door and the MINI Convertible. With this, MINI India has the youngest portfolio of its iconic products. The new models exhibit MINI’s iconic emotive design, clever functionality and go-kart feeling with additional surprise features.
BMW Motorrad will redefine the premium segment of motorcycles under 500cc in India with the launch of the much-awaited BMW G 310 R and BMW G 310 GS. These motorcycles will be launched in India in mid-2018 and will offer a true BMW at competitive costs in this segment.
Apart from the metros, which are the emerging markets that are contributing to your sales growth?
BMW India is the pioneer in bringing luxurious dealerships to India. BMW India has set a decisive course by setting up BMW dealerships of international standards across the country with very high standards in service quality and customer care. Currently, BMW India has 43 sales outlets across 32 cities in the Indian market.
With the rise in disposable income, customers in metropolitan cities as well as the Tier II and Tier III markets are not hesitant to spend on luxury products and services.
We have further broadened the horizons by creating more exclusive touch-points to connect with our clientele across the country especially in the emerging markets such as BMW Mobile Studio (in 50 cities), MINI on Tour (in 18 cities), BMW JOYFEST (in 15 cities), BMW xDrive Experience (in 12 cities), BMW M Performance Driver Training (in 4 cities), BMW Golf Cup International (in 12 cities) and recently introduced BMW Culinary Series.
At BMW, we also recognise the cultural perspectives of our customers. For us, the understanding of luxury and the appreciation for finer things extends deeper to other aspects of life as well. We are the most aspirational automotive luxury brand in India with innovative channels of engagements in lifestyle, sport, art and culture. Our collaborations with leading cultural platforms across the country bring real ‘Joy’ to our customers. BMW Art Cars in India, India Art Fair, Kochi-Muziris Biennale, Jodhpur One World Retreat and BMW Guggenheim Labs are engagements that have brought our customers closer to us.
The luxury car market is getting aggressive by the day with launching of all new models and refreshes. What actually drives the sales momentum in India apart from the growing number of millionaires?
Premium’ is beyond mainstream. To achieve further growth, it is imperative to create a certain distinctiveness of brand. Indian consumers strongly associate the BMW brand with exclusively authentic luxury products, which are distinguished by their emotional appeal, uncompromising engineering, innovative technology and outstanding quality. To win them over, all these needs should be met. Customer acquisition is only the first step to create brand loyalty. To meet the expectations of the luxury consumer, BMW India offers an enhanced experience through luxurious dealerships, exceptional brand engagement events and outstanding customer service in addition to superior quality products.
Owning a luxury car will never be inexpensive but BMW guarantees complete peace of mind with absolute transparency and zero surprises when it comes to ‘cost of ownership’. We enhance ownership experience throughout the entire lifecycle of our products with customer-friendly services such as guaranteed buy-back with BMW 360°, BMW Service Inclusive, BMW Repair Inclusive and BMW Secure. BMW India has also launched the bespoke ‘BMW Privé’ customer loyalty program with unmatched privileges. Our focus is thus on creating a ‘complete brand experience’ because focus on customer satisfaction is the key differentiating factor now and in future.
At BMW, we also recognise the cultural perspectives of our customers. For us, the understanding of luxury and the appreciation for finer things extends deeper to other aspects of life as well. We are the most aspirational automotive luxury brand in India with innovative channels of engagements in lifestyle, sport, art and culture.
Why do you call some of your cars SAV and not SUV?
The core of the BMW brand is joy and joy cannot come with only utility, it can only come with activity and that is the reason why we prefer calling our luxury crossovers, Sports Activity Vehicles (SAVs).
BMW is always at the forefront with new ideas that break through the horizon. We are the pioneers in creating new vehicle segments. The introduction of the BMW X5 in 1999 opened up totally new dimensions for all-wheel drive vehicles. The BMW X5 is a Sports Activity Vehicle with off-road capabilities that could be driven like a sports car. The concept of the BMW X5 encompassed the development of all-terrain models with a clear orientation towards luxury. The BMW X5 captured the imagination of its customers with a level of dynamic performance unmatched among its off-road peers.
With the BMW X3, BMW picked up the pioneering baton once more and introduced the SAV concept into the midsize segment. The BMW X3 was born with more compact dimensions than the BMW X5 and even more agile handling. With the BMW X6, BMW offered an entirely new type of car, a unique design concept and driving dynamics never seen before – the world’s first Sports Activity Coupé.
The Sports Activity Vehicle segment was further redefined with launch of the BMW X1- the world’s first Compact Sports Activity Vehicle with a young and modern character. With its agility and versatility, the BMW X1 guaranteed a new driving experience in the premium compact SAV.
India surpassed Germany to become the No 4 automobile market in the world last financial year. How important is this market for your parent company?
India is one of the most rapidly growing economies in the world and is one of the most important markets for BMW Group in the region. Though the Indian luxury market is still at a nascent stage, it has immense potential with rising purchasing power, growing aspiration for luxury brands and evolving lifestyles.
BMW is well positioned in the Indian market with the most desirable product portfolio across each segment in the luxury car market. In order to achieve growth, we will resolutely expand our product range and cover all opportunities in the luxury car segment, which are relevant to us.
What are your plans to further increase local production of BMW cars at your factory in Chennai? Has it helped to reduce prices and increase sales?
BMW Group India has constantly increased the number of its locally produced car models. Presently, the BMW Group Plant Chennai locally produces nine car models, two of which – the first-ever BMW 6 Series Gran Turismo and the all-new MINI Countryman, were launched this year. BMW Group has strengthened its commitment to the Indian market by increasing the level of localisation at BMW Group Plant Chennai to upto 50 per cent.
Will electrification of cars work in India? Is it the future despite flip-flop policy of the government on the issue?
BMW has defined the future of electric mobility and sustainability in one letter – ‘i’. BMW i is a comprehensive and ground-breaking concept for sustainable mobility. It represents visionary electric vehicles and mobility services, inspiring design and a new understanding of premium that is strongly defined by sustainability.
In 2015, BMW launched the future of mobility in the Indian market in the shape of iconic BMW i8, the most progressive sports car. A plug-in hybrid drive with the heart of a sports car and a mind of a responsible citizen, the BMW i8 paves the way for performance oriented emission-free mobility.
This year, BMW India will also launch the BMW i8 Roadster plug-in hybrid car taking e-mobility to the realm of sporty aspirations. The car unveiled at the Auto Expo and will be launched soon in the market. In addition, the BMW Group is at present contemplating the market feasibility of bringing the all-new BMW i3s to India.
Premium automotive manufacturers like BMW are already progressively taking a lead in e-mobility with radical investments in innovation and technology. Plug-in Hybrid Electric Vehicles (PHEV) are the first step towards the eventual transition to Battery Electric Vehicles (BEV). A framework that only supports BEVs will only make it difficult for effective e-mobility implementation in India. Therefore, we believe, a balanced taxation framework supporting both PHEVs and BEVs is required.
The deciding factor in the success of electric mobility is the infrastructure availability. Uninterrupted supply of power to charge the cars at any time is a necessity.
How much have you invested in your brand in India, including your factory at Chennai?
Till date, BMW Group has invested Rs 12500 cr ($182.5 million) in its subsidiaries in India. (BMW India – Rs 5200 cr ($72 million) and BMW Financial Services India – Rs 7300 cr ($110.5 million).