BMW sales accelerate as chip shortages abate

With the pandemic and the chip shortage — that was a result of supply chain disruptions — getting back to normal, luxury car-makers are seeing 2023 present record sales and strong demand. BMW India's president and country head Vikram Pawah says, "We've broken a few records in the first half. We've had the best ever monthly sales. We've had the best ever quarterly sales. And the best ever half yearly sales. The numbers are over 5,800 cars and 4667 motorcycles," he said. Last year, the company crossed 11,000 units in total sales for cars for the whole year.

What makes BMW's numbers relevant are that for the first four months of this year, there were still supply restrictions on. Some of their big launches such as the X5 SUV which accounts for some 12 percent of total has only been announced now. "May is when our supplies started coming back to some kind of normalcy, not fully normal. May and June, combined of 2023 compared to last year 2022, we have grown 32% in cars."

Has the broken supply chain been fixed ? Pawah says not entirely but it is better than earlier. "Logistics are an uncertain thing right now, world over. You know, there is waiting at ports at times because ships are not available or containers are not available. That's the bigger challenge in the global supply chain than anything else right now," he adds. The big shift that BMW and others are seeing is the growing volume of flagship products as well as EVs despite high pricing. "The luxury class, which is the 7, i7, X7 and XM cars, are contributing to almost 20% of our sales, having grown by 128% year on year. As of yesterday, we delivered more 7-Series and i7 cars than we delivered in the entire year 2022."

Other resellers in the luxury ecosystem concur. Jatin Ahuja, the founder of Big Boyz Toyz a dealership network that specialises in pre-owned luxury cars says that the BMW 7 Series being one of the latest saloons is in high demand and the hottest luxury car in the market right now.

Pawah claims BMW is now the leader in the EV race. "We have 50% market share in the premium segment. We are number one, not only in volume but also in number of pure offerings as well. We have four products that we offer--four distinctly different electric products." For six months, BMW has delivered over 500 EVs and there is a waiting of three to six months at the moment. "iX is the best-selling EV and sells more than all the other premium EVs combined which is a great testament from customers."

At least in some parts the sales are moving fast, thanks to a younger breed of buyers. "76% are first-time premium buyers, which we have never seen before. That means we are actually expanding the premium segment and 56% of these buyers are in the age group of 31 to 45 which is younger than normal," Pawah adds.

Does he see a shift from sedan to SUV happening in the luxury market for India? Pawah says "Not for brand BMW; we have 50% share of SUV and 50% share of sedan. That is with volumes. So it's an equal distribution because if the X1 is 20% of my sales then the 3 grand limousine sedan is also around 20% of sales. 7 series, including i7 and X7, is also 20% of sales so there's clearly an equal distribution."

Ahuja says that younger luxury car buyers are a given in today's world. "In some senses the BMW sales are getting stronger in the new segment also because they are sought after thanks to the brand strength in the aftermarket. Regardless of whether it's Audi Merc or Bimmer, the reality is that the best cars once bought don't get sold too quickly and that creates a stronger demand in the pre-owned market which actually then helps propel the demand for new cars as well," he says. "Take the Merc G Wagon or the BMW M 5 for example. These are amongst the best cars in their segments and hardly ever come to the aftermarket." Ahuja also adds that the shortages and chip supply interruptions have been sorted out for the most part.

When sales grow, there is a natural progression of dealership network or footprint expansion. "We paused during COVID, now we are back to it. This year we have restarted our network expansion. Now we are at 80 touch points across the three brands. By the end of 2024, we will cross 100 touchpoints."

BMW has also launched in the first half of the year, a guaranteed future value product called 360 Degree finance. "In the first half, we wrote the best ever number of contracts under that scheme. That concept is catching up really with the Indian customers now because with the younger population they don't want to block their cash flow. This is a perfect way of hassle-free buying, you know you don't want to think about when I need to return the car, how will I sell it, how will I get the cash back and so on," Pawah said. "So they are happy to pay a little bit extra on interest which is minor but save on the cash flow."