BMW looking to lead growth in India’s luxury car market: Vikram Pawah
BMW India president Vikram Pawah says the luxury carmaker supports the government’s bid to move towards electric cars and called for a clear roadmap for that drive
The priority for BMW is not to become the No. 1 in India’s luxury car market, but to lead industry growth, said Vikram Pawah, president of BMW India. In an interview, he spoke of market growth and the company’s plans to introduce electric and hybrid vehicles in India. Edited excerpts:
You have been at the No.1 position for some time in India before losing that spot to Mercedes Benz. Any specific strategy to regain that spot again?
In 2007, when we entered the market, first three years we focused on creating a foundation and developing the market. At that time, the luxury car market volumes used to be only 2,000 units or so. We invested in infrastructure, set up a manufacturing factory in Chennai, set up unique dealer network and then launched products.
First three years were foundation-setting years; next three years we focused on growth and market leadership. From 2013 to 2016, we consciously made a decision to get into a sustainable growth phase. And in 2017 we declared our next phase of three years of what we call “the power to lead”.
It’s more about a mindset – to be a benchmark and leader in everything we do. Because we were the one who created the industry. And we think we are again in a position to expand the market. We want to lead the growth of the industry in India. That is why we say that being No. 1 is not our priority. Our priority is to lead the growth of the industry.
What are your plans for electric vehicles?
We totally support government’s efforts of moving towards electric vehicles. BMW Group introduced electric vehicles long time ago. What we however require is a clear roadmap from the government in terms of setting up charging stations, tariffs for charging, etc. The current policy premises does not support plug-in vehicles but there is a lot of demand for it from our customers and we are very much focused on bringing more plug-in cars to Indian market.
BMW India plans to launch the BMW i8 Roadster plug-in hybrid car in near future. In addition, the BMW Group is at present contemplating the market feasibility of bringing the all-new BMW i3s to India. I think that at some point, the government will also realise that plug-in technology is a great stepping stone towards promoting electric vehicles in the country.
What are your plans to tackle competition from other car-makers like Audi and JLR, who have made significant inroads in India within a short span?
I don’t like to talk about competition. I like to talk about myself. We are confident of maintaining growth. BMW India sold 9379 cars in 2017, clocking 25% growth as compared to 2016. BMW has delivered its finest performance in India till date in 2017 with all three brands – BMW, Mini and Motorrad. In 2018, BMW has maintained the momentum with 11% growth in the first quarter. Today, one of the major threats for the luxury cars market in India is that the industry itself is very small size.
For us, however, it is a perfect time because BMW is entering into the biggest ever product offensive. You have not seen this kind of momentum from BMW in the past. We will be launching 16 products in a year.
I want to double the overall market so leadership will come automatically. If we are the leader in growing the market, we’ll be the leader of the market as well. Our investments are in moving the market size which is roughly about 30,000 units per year currently.
Any plans to set up a new green-field facility or expand the current factory in Chennai? Also, in how much time do you see the industry size doubling?
We are having a capacity of 15,000 units at our Chennai plant in a single shift. We will enhance or utilize the facility as and when required. We are not looking at any green field facility presently.
Coming to the next part of the question, if we look statistically, India is poised to replicate China going by the economic scenario and growth of population. However, what we are seeing in India in the last four years is that auto market is not growing very well and the condition of luxury car market is facing greater challenges. The implementation of goods and services tax is a good thing for the auto industry. Also, the amount of work done on road infrastructure is very encouraging for us.
However, there are concerns about consistency in terms of policy regulation and we need a better longer term view. If we talk about taxation, at least 60% of the price of a luxury vehicle is mainly taxes as compared to 20-30% in most other countries. So, while I cannot give a specific timeframe for the doubling of the market, we are seeing many encouraging trends. For example, ‘emerging’ towns are going to be the next drivers of growth for the industry.
There have been some talks in the past about scrapping of old diesel vehicles. Is it a matter of concern for you?
We need to look at world-wide norms to understand this. Countries that are doing this have a clear scrappage policy that set the age limit for the vehicles. I think it’s a good thing to do from an environment, public and technology point of view. Technology keeps evolving with time but until and unless you phase out an older technology, it will not be easier to bring in newer ones.