Premium car segment too hit by slowdown: Phillip von Sahr

Interview with president, BMW Group India

The luxury car segment witnessed quite a price war in 2011 and 2012, with companies offering huge discounts to gain customers. BMW, the leader in the segment, is challenged by Audi. BMW Group India president Phillip von Sahr says the company does not intend to be number one on the basis of discounts. The company in fact raised its prices from January 1 this year. Sahr spoke to Swaraj Baggonkar on the sidelines of the launch of the new 7 Series. Edited excerpts:

How many models has BMW launched this year so far?
This is the second from BMW and third from the BMW group. The company launched the (new) X1 in February. Today, we have launched the 7 series. This car will now be produced in Chennai and it's not the last launch with another one due in September.

After the 7 Series, what's up next?

We will launch something which is on the other side of the spectrum. It's the first premium BMW compact car. In addition to the 7 Series, by end of 2013, we will be producing the 1 Series, 3 Series, 5 Series, the X1 and X3 in Chennai.

Where does BMW stand today in terms of sales? Is it still number 1?
We are leaders as the most trusted brand. We have a very good dealer network. We have now 35 dealers and want to expand it to 50 by the end of 2014. All this to us in number one. Last year (calendar year 2012) we sold 9,375 cars.

What about the January-March period?
I do not know what others have sold. We release our numbers once a year and we are not volume manufacturers talking about volumes, we are clearly premium luxury car manufacturers.

What volumes does the 1 Series promise?
One the most sold cars. But despite its compact dimensions, it will be a premium car. We are looking at different target groups. We will see how much it sells, but we can't say whether it will become the largest selling BMW in India.

BMW raised prices in January. Has there been any impact on demand?
Yes of course, there has been an impact. We increased prices by up to 10 per cent and an average of five per cent and we reinvested the amount in dealership training and brand. We will open a training centre in 2014.

There is a significant slowdown in the mass car market. What about the luxury car segment?
The actual economic situation has an impact on the luxury car market. The view over the world due to the economic situation is that the luxury car market is not so much suffering, but (the realty is that) it is suffering. The cake is a little bit smaller.

What is the size of the luxury car market in India?
It was 30,000-40,000 units last year. There are lots of customers who want to upgrade to a luxury car. I do not expect a lot (of growth) from 2013.

You have a capacity of 11,000 units per year at Chennai. Will we see an expansion?
Right now, we are happy with 11,000 units. If necessary, we can increase the capacity, but more challenging is how many different models the plant can produce and there we are happy that six BMW models are being made. We are operating at two shift capacity now and we can go to three shift capacity if necessary.