New Delhi: German luxury car maker BMW AG said it is likely to introduce its Mini, the iconic premium small car, only in two cities if it brings the brand to India.
“If we would launch the Mini in India, (it) would be only in two markets—specifically Delhi and Mumbai,” said Peter Kronschnabl, president of BMW’s local unit. “These are, by potential, the biggest markets for this brand,” which is “a small car in terms of size but a luxury car in terms of price.”
BMW’s Munich-based headquarters will take a decision in a month on bringing the car to India. The company has completed a feasibility study on the potential of the premium car in the Indian market, in which small cars have been synonymous with inexpensive cars. BMW, however, hopes the car could be a third car for high net worth Indians with a love of the high life.
Upper-class Indians have been digging into their wallets to fund luxury purchases ranging from shoes that cost Rs30,000 to cars that cost Rs30 lakh, and BMW, which started local assembly operations last year, sold 1,387 vehicles in 2007, almost five times the numbers sold a year ago, when all its vehicles were imported.
Since then, led by demand from even smaller but affluent towns such as Ludhiana in Punjab, it has nearly doubled its production capacity to 3,000 units a year, and is targeting sales of 2,000 units this year—almost catching up with Daimler AG’s Mercedes-Benz unit which has been present in the country for more than a decade. In March alone, BMW sold 393 units, a quarter of which were sold in New Delhi alone.
Small luxuries: Minis on the assembly line at a BMW plant in Cowley, the UK. BMW will import the car in India as fully-built units. (Suzanne Plunkett / Bloomberg)
A robust economy and a stock market boom has created about 83,000 dollar-millionaires in India, according to a 2006 Cap Gemini estimate, the latest available. That’s spurred buying in personal wealth symbols such as private jets and small islands. And India’s luxury car market is estimated to chug along at 5,000 units a year, and will likely double by the end of the decade, according to projections provided by car makers themselves.
New Delhi and Mumbai, the country’s financial capital, account for about 20% of India’s passenger vehicle sales, according to analyst estimates.
Kronschnabl said the number of Minis he expects to sell each year “would be in the very low hundreds.”
Kronschnabl, who had earlier said that Mini would be sold through a different distribution network in India, like elsewhere in the world, added: “The project needs to be viable for dealers, (since they too) are investing in the brand.”
BMW will import the car as fully-built units and not assemble them at its Chennai plant, which currently produces the 3 series and 5 series models. The Mini is a smaller-sized car compared with the BMW series, but an imported vehicle could cost as much as Rs20 lakh.
“We are not considering local assembly at the moment,” said Kronschnabl. If the vehicle is assembled locally, “the price would come down by 30%, then it would be Rs15-16 lakh, but we would not sell substantial numbers and the investment would not justify local assembly.”
Imports of kits are slapped with just 10% duty compared with about 110% for fully built cars, making locally assembled cars much less expensive than imported models.