BMW will continue to gain segment share despite slowdown: President & CEO

In an interview with T E Narasimhan & Gireesh Babu, Rudratej Singh of BMW Group India says the company has remained competitive despite headwinds

Luxury carmaker BMW on Thursday launched a facelift of its entry-level SUV, BMW X1, which it hopes will accelerate growth. In an interaction with T E Narasimhan & Gireesh Babu, Rudratej Singh, president and chief executive of BMW Group India, says the company has remained competitive despite headwinds. Edited excerpts:
 
How has the luxury segment been affected by the slowdown? How is BMW handling this?
 
We are yet to come out from the slowdown. You are not seeing significant signs of improvement this year. Despite this meltdown, BMW was competitive in terms of volumes last year. We have gained share in the luxury segment. With the strategy that we put in place between 2018 and 2019 of putting our freshest, newest products out there… you will see the benefits of that coming in 2020 as well. We are confident that even in 2020 we will continue to gain segment share.

 

The impact of a slowdown, ironically, is harder on the luxury segment than on overall market. The reason is tremendous amount of stress, plus tax that the premium segment has to give out. BMW is not just about luxury, it is bringing in new sensibilities, technology, safety parameters into the country. So, we are increasing standards of products and services and that comes at a cost. We should not be looked at only as a luxury product.
 
We sold 9,000 BMWs, 641 MINIs, and 2,403 motorcycle units. We expanded our dealerships, worked on our pricing and cost of ownership strategies. We have 80 touch points across the country and we will be expanding this to 100 in 2020. In BMW Motorrad, we grew at 10 per cent under very challenging conditions last year, and we are confident for the next two-three years that we will disrupt the market.

 
When do you expect a recovery?
 
 With headwinds being added every day, with the supply chain issues that we may see going forward, it might be a few more quarters. It might get worse before it gets better. On the supply side, at a macro level, the government is doing a few things that will help us in the medium and long term. But in the short term, it is for the companies and the manufacturers to create demand.
 
What is the status of transition to BS-VI?
 
All our products now in the market are BS-VI (Bharat Stage-VI) compliant in March itself. We have some stock of BS-IV variants of a few models left, and I would recommend everyone who is interested in to move very quickly.

 
What are your plans to be on top of the segment?
 
BMW will remain extremely competitive in a highly volatile market. We are extremely confident of being competitive under headwinds. Our ability to grow the segment is our only sign of competitiveness, not playing this game of leadership in a 1 per cent segment. A 1 per cent segment doesn’t warrant running victory laps of leadership. Competition is our ability to increase a segment to 5-6 per cent and grow BMW as the lion’s share of that.
 
How is the X1 facelift going to help in this?

 
X1 is a very significant player, because it has been the entry into BMW for many aspirants over the pst 10-11 years. It has already clocked 20,000 numbers. In terms of percentage, it is already about 30 per cent and growing every year. So we are very confident of the 2020 volumes. We are starting the year with an online launch. We have some very aggressive pricing (starting at Rs 35.9 lakh), but that is not the only part of the access strategy. For the early bird booking in March, we are offering five years/60,000 km services and warranty, which is segment leading and a buyback after five years at Rs 15 lakh. Besides, we have attractive financing schemes.

 
Is it for the first time you are launching a product online?
 
 X1 is the most progressive brand in our portfolio. It attracts young people. In today’s situation with the coronavirus outbreak and the sentiment being the way it is, we would like to just encourage people to use technology as well. We are turning an adversity into an opportunity to make sure that people are safe, but also have a thrilling experience. Once it’s a success, we will do many more of these.
 
What will be the coronavirus’ impact?
 
Whether the supply chain impact hits us will be seen only in the next quarter. I think people are underestimating the impact, because the supply chain impact always comes with a lag. Nobody can predict where it is going right now. But, if it gets worse, the industry will also face some headwinds. At BMW, we have secured supply chain pipeline for the next few months and after that we will have to see.