Just three weeks after taking over, BMW Group India’s new Chief Executive Officer (CEO) and President Rudratej Singh launched the seventh generation model of the company’s latest 3 Series sedan.
The car generates around a third of its annual sales and is the company’s flagship product. Available in three variants across diesel and petrol engines, the ex-showroom prices of the sedan start at Rs 41,50,000 and go up to Rs 48,00,000. In 2009, the 3 Series range was launched at an ex-show room price of Rs 24,00,000 to Rs 25,00,000. Singh says he doesn’t expect duties to come down anytime soon. Also, BMW does not see the current downturn in the auto segment impacting its plans in any way.
So, is this the best time to launch an expensive car? Singh thinks it is, because new cars like the 3 Series will be even costlier in March 2020 when BSVI norms kick in. “We are committed to this market for the long term, and understand that for growth in India, there will be short-term hiccups,” he said.
The automobile manufacturer is also looking to expand distribution by opening three new dealerships in the coming months.
According to analysts, the steep jump in prices have been a result of high customs duty, excise, goods and services tax (GST), as well as price increases by manufacturers on the back of input costs of steel and rubber, among others.
According to recent reports, luxury or premium car sales for European manufacturers have actually slowed down over the years with the entire segment not growing beyond 40,000 units for car makers that include Jaguar-Land Rover, Audi, BMW and Mercedes-Benz.
Even with cars being assembled in local plants as is the case with BMW and others, prices have been far higher than in other markets. This is because key components such as the drive-train and engine are still imported. Also, it is because of the inability of car makers to lower costs unless they strike an optimum manufacturing and cost efficiency balance.
Analysts say that for efficiencies of scale to kick in, volumes ought to be at least at 100,000 units a year per manufacturer. Singh declined to comment on the rationale but said BMW won’t get into commoditising premium.