BMW’s India model

BMW may be globally launching electric cars shortly, but India will have to wait a while. Infrastructure, such as charging stations and service centres, are needed. Tax breaks, which make these otherwise expensive cars affordable, are also awaited. Meanwhile, BMW’s success with an innovative concept in India may see it being replicated in emerging markets in Russia, Thailand, and Malaysia. In August 2012, BMW launched its travelling showroom in Karnal, a Haryana district best known for its flavourful basmati rice. Made of modular panels, the showroom can house four cars and accessories, a reception area, and a VIP lounge. It later visited eight other tier II and III cities.

In Agra, 300 people made enquiries and took 150 test drives, resulting in more than 24 cars being sold. In Dehradun, 5,000 walk-ins and 300 test drives saw 20 cars sold. In all, more than 80 cars were sold, and Philipp von Sahr, president of BMW Group India, is delighted with the response since the camp is held for only two or three days in each location. More important, the showroom gives customers an experience of the brand to induce them to buy from a brick-and-mortar showroom closest to them. (Overall, BMW sold about 9,600 cars in 2012.)

Sharad Kachalia of Navnit Motors, a BMW dealer, says the mobile showroom is a smart, cost-effective way to build the brand and sell. “It costs around Rs 20 lakh [one-time expense] to set up, and you need to rent land for it,” adds another BMW dealer, who declined to be named. The company is now taking the concept to seven more cities.

Selling cars on the bedrock of a sporty, youthful image helped BMW nudge out first-mover Mercedes-Benz in 2009, three years after it set up its subsidiary here. BMW has also bettered competitors by introducing aggressively priced cars. Its 3 Series Corporate Edition India (no longer available), a basic model with manual transmission and no leather seats, was priced around Rs 25 lakh when launched a couple of years ago. That was Rs 5 lakh to Rs 7 lakh cheaper than Audi’s A4 and Mercedes-Benz’s C-Class. X1, a current BMW model, had nothing comparable in terms of segment and size until Audi introduced the Q3—but it’s costlier and came a year and a half later.

BMW is now adding dealers at Mangalore in Karnataka, Raipur in Chhattisgarh, and Lucknow in Uttar Pradesh. “We want to grow from about 35 dealers to 50 by 2014,” says von Sahr. A permanent showroom was opened in Patna, Bihar, after positive response to the mobile showroom, he adds.

BMW’s small-town strategy will be bolstered with a 1 Series compact hatchback’s launch this year. Based on the 3 Series platform, it will be assembled in its Chennai factory (the sixth model to be built there) and will attract lower duties. It will compete with Mercedes-Benz’s smaller B-Class and A-Class cars launched recently.

“If the starting price of Rs 40 lakh is lowered by Rs 10 lakh, the customer base doubles,” says Abdul Majeed, auto practice leader, PricewaterhouseCoopers India. That’s what the compact hatchback may do—double sales.