New Delhi: German luxury car maker BMW AG is getting close to making a call on assembling the Mini car in India.
“We want to introduce the Mini forever,” and not temporarily, says Peter Kronschnabl, president of BMW’s local unit.
“We will evaluate all possible options, including CBUs (completely built units) and CKDs (completely knocked down kits), by the end of this year.”
BMW had previously said it was conducting a feasibility study to introduce the car in India by 2009. The company, which sells some BMW models in India now, assembles its 3-series and 5-series cars in Chennai from German kits.
BMW India’s Peter Kronschnabl
BMW, which makes 240,000 units of the Mini a year in its Oxford, UK factory, has said that demand has exceeded supply of the vehicle for the past many years. The company also plans to unveil its 10-year strategy plan later this year, which will address the issue of the Mini’s production expansion.
Imports of kits are slapped with only 10% duty compared with about 110% for fully built cars, making locally assembled cars much cheaper than imported models. After it started assembling in India, BMW has sold 530 cars in the past five months, compared with 257 sold in 2006.
The Mini is a smaller sized car compared with the BMW series, but an imported vehicle could cost as much as Rs20 lakh.
“Indians can find it difficult to pay so much money for a small car,” notes Mohit Arora, director at JD Power Asia-Pacific, a market research agency. “Establishing the brand is a fairly uphill task.”
In India, a BMW 5-series sells for Rs37 lakh, but less-premium models such as a Honda Accord, a large sedan, sell for about Rs15 lakh.
Small cars in India sell for as little as Rs2 lakh, though these are everyday, city cars. India’s cheapest small car, likely to be introduced next year by Tata Motors Ltd, is likely to sell for about Rs1 lakh.
The Mini, an iconic European car, came about because of a fuel shortage in the late 1950s and was made by the British Motor Corp. as a two-door car with an 848cc engine to replace large petrol guzzlers on the road. Since then, it has survived various tweaks and changed parents to become a premium small car.
Kronschnabl indicated that BMW will set up a different distribution network to sell the brand in India, as it does in the rest of the world.
“Mini is a different brand and not part of the (BMW) series,” said Kronschnabl. “The minimum requirement is a separate dealership, but we will allow the use of BMW workshops.”
BMW said the main markets for the Mini would likely be Delhi and Mumbai, and it would first start dealerships in these cities.