BMW lines up Rs 110 cr foray

To set up unit in Chennai, roll out first model in '07.

German automobile major BMW AG is making a formal entry into India by setting up its manufacturing and sales subsidiary with an initial investment of Rs 110 crore (euros 20 million).

The company intends to build an assembly plant in Chennai and a wholly owned sales subsidiary in Delhi, apart from employing around 200 people in the country.

"The Indian automobile market offers significant growth potential in the long term. With our increased presence here, we will be well-positioned to tap this potential. This marks an important step in our Asia strategy," Helmut Panke, chairman of the board of management, BMW AG, said in a release issued here today.

The Indian initiatives are under the company's "advancing international market strategy", with the company also planning to expand its dealership network of all metropolitan centres. The Indian foray is under the company's expansion plans in Asia.

The production and sales subsidiary will be fully owned by the BMW Group and is expected to roll out its first vehicle by early 2007.

The Chennai plant will produce BMW 3 series and 5 series saloons, with the production intended solely for the local market.

In addition to operating the assembly plant and importing BMW cars, the subsidiary will also develop dealer networks, decide on pricing and product strategy, apart from providing marketing and after sales services.

In the medium term, the company will employ around 200 people in India, and intends to create an additional 600 jobs in dealer and service networks.

At present, two intermediary dealers with three outlets represent the BMW group in India. In financial year 2004, the company delivered 122 vehicles through this network. In the first half of 2005, BMW's deliveries totalled 100 automobiles.

With its planned assembly plant in India, the BMW group will have a total of 23 production locations in 13 countries worldwide, and the setting up of the new sales subsidiary will increase the total number of its global units to 35.

A network of national importers is able to serve another 120 countries. This gives the BMW group an unmatched international production and sales network in comparison with its competitors, stated the release.

BMW, with revenues of euros 44,335 million, is targeting an annual sales volume of 150,000 cars in the Asian markets by 2008. In financial year 2004, it had sold 95,482 vehicles in Asia.