 "BMW adds 1 to luxe hatch count")
The luxury small car market is heating up as German giant BMW prepares to take on the market leader Mercedes-Benz in the segment which restored the latter to the top of the pecking order.
BMW, which slipped in rankings to finish last among the three luxury car manufacturers, launched its smallest car, the 1 Series, today to challenge the Mercedes-Benz A and B Class in the volume segment.
Launched at a price of Rs 20.90 lakh (the 116i model, ex-showroom, all-India), the 1 Series is the cheapest BMW one can own in India. It is a five-door, four-seater, large hatchback which is bigger than any of the mass segment compact cars from the stables of Maruti Suzuki (Swift), Hyundai (i20), Tata (Indica Vista) etc.
Philipp von Sahr, president, BMW Group India, says, "The logic is that if the price is low it has to sell more, but this car has a very important strategic task for BMW. It is the first time that we are offering a car in the premium compact segment. That means, we are looking for a lot of new customers to enter the BMW world."
Unlike targeting the usual wealthy class who can choose between Mercedes-Benz, Audi and occasionally, Jaguar Land Rover, with the 1 Series, BMW is aiming for the buyers of Honda, Toyota and Volkswagen, to name a few.
"We will target people in the age group of 18-40 years, urban high-achievers, educated, who want to drive the car themselves. The 1 Series has proved in other markets that it can make the drivers of high volume cars from Honda, Hyundai and other brands to come over to BMW," von Sahr adds.
The 1 Series even undercuts the early-bird Mercedes-Benz A Class, priced at Rs 22.05 lakh (ex-showroom, Mumbai), by Rs 1.15 lakh. The A Class, which is shorter in length but wider than the 1 Series, is imported as a fully-built unit, unlike the BMW 1.
Riding high on the volumes of the A and the B Class (priced at Rs 23.5 lakh), Mercedes-Benz regained the numero uno position in the luxury car space after a four-year hiatus.
Though Mercedes-Benz is reluctant to share model-wise sales data, the A and the B Class have turned out to be among the bestsellers for the company. Despite the high demand, the Pune-headquartered company is yet to finalise local assembly plans for the two models.
"The small luxury car segment is clearly growing because there is a market for more compact premium cars which you would want to drive personally, unlike other luxury cars in which you are driven around. There is lot of competition in this segment so it is poised for further growth", adds von Sahr.
BMW, which is struggling currently, is hoping to replicate Mercedes's success with the 1 Series. Mercedes-Benz achieved a growth of 22 per cent in the first half of this year, despite a challenging economic environment. The growth posted by Mercedes in the April-June quarter stood at a staggering 32 per cent with sales of 1,756 units.
However, BMW states that it is not the race for the top position that prompted the company to launch the 1 Series. While the small car adds a new category to BMW's product portfolio that consists of 12 models, the manufacturer says that the 3 and 5 Series will continue to remain the bestsellers in its portfolio.
"For us it is not just the volumes which are important but also the profitability. This car makes the volume but you don't have the money to invest in the brand, so you have to find the right mix of high sales and sustainable leadership", adds von Sahr.
To meet the expected rise in demand, BMW is increasing its India investment to total Rs 390 crore by the end of 2013. The company has started a second assembly line at Chennai which is operating on a single shift.
In addition to the two shifts of the first line, BMW is geared to produce eight models in its India plant. It presently assembles the 1, 3, 5, 7 Series, X1, X3 and the Mini Countryman. It has expanded the plant's annual capacity to 14,000 units from 11,000 units.
Mercedes-Benz, though, is not stopping at the A and the B Class. It wants to launch more such cars in the 'affordable' price bracket. A compact sports utility vehicle and a compact sedan are also in the pipeline. By 2015, two out of every five cars sold by Mercedes-Benz will be compact cars.
BMW, which slipped in rankings to finish last among the three luxury car manufacturers, launched its smallest car, the 1 Series, today to challenge the Mercedes-Benz A and B Class in the volume segment.
Launched at a price of Rs 20.90 lakh (the 116i model, ex-showroom, all-India), the 1 Series is the cheapest BMW one can own in India. It is a five-door, four-seater, large hatchback which is bigger than any of the mass segment compact cars from the stables of Maruti Suzuki (Swift), Hyundai (i20), Tata (Indica Vista) etc.
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BMW has pulled down its entry price with this launch from a price-point of Rs 28.90 lakh for its X1, a compact sports utility vehicle. The top-end variant of the 1 Series, which also comes with a diesel option, is priced at Rs 29.90 lakh. The car will share the Chennai facility with five of BMW's existing models that are manufactured out of it.
Philipp von Sahr, president, BMW Group India, says, "The logic is that if the price is low it has to sell more, but this car has a very important strategic task for BMW. It is the first time that we are offering a car in the premium compact segment. That means, we are looking for a lot of new customers to enter the BMW world."
Unlike targeting the usual wealthy class who can choose between Mercedes-Benz, Audi and occasionally, Jaguar Land Rover, with the 1 Series, BMW is aiming for the buyers of Honda, Toyota and Volkswagen, to name a few.
"We will target people in the age group of 18-40 years, urban high-achievers, educated, who want to drive the car themselves. The 1 Series has proved in other markets that it can make the drivers of high volume cars from Honda, Hyundai and other brands to come over to BMW," von Sahr adds.
The 1 Series even undercuts the early-bird Mercedes-Benz A Class, priced at Rs 22.05 lakh (ex-showroom, Mumbai), by Rs 1.15 lakh. The A Class, which is shorter in length but wider than the 1 Series, is imported as a fully-built unit, unlike the BMW 1.
Riding high on the volumes of the A and the B Class (priced at Rs 23.5 lakh), Mercedes-Benz regained the numero uno position in the luxury car space after a four-year hiatus.
Though Mercedes-Benz is reluctant to share model-wise sales data, the A and the B Class have turned out to be among the bestsellers for the company. Despite the high demand, the Pune-headquartered company is yet to finalise local assembly plans for the two models.
"The small luxury car segment is clearly growing because there is a market for more compact premium cars which you would want to drive personally, unlike other luxury cars in which you are driven around. There is lot of competition in this segment so it is poised for further growth", adds von Sahr.
BMW, which is struggling currently, is hoping to replicate Mercedes's success with the 1 Series. Mercedes-Benz achieved a growth of 22 per cent in the first half of this year, despite a challenging economic environment. The growth posted by Mercedes in the April-June quarter stood at a staggering 32 per cent with sales of 1,756 units.
However, BMW states that it is not the race for the top position that prompted the company to launch the 1 Series. While the small car adds a new category to BMW's product portfolio that consists of 12 models, the manufacturer says that the 3 and 5 Series will continue to remain the bestsellers in its portfolio.
"For us it is not just the volumes which are important but also the profitability. This car makes the volume but you don't have the money to invest in the brand, so you have to find the right mix of high sales and sustainable leadership", adds von Sahr.
To meet the expected rise in demand, BMW is increasing its India investment to total Rs 390 crore by the end of 2013. The company has started a second assembly line at Chennai which is operating on a single shift.
In addition to the two shifts of the first line, BMW is geared to produce eight models in its India plant. It presently assembles the 1, 3, 5, 7 Series, X1, X3 and the Mini Countryman. It has expanded the plant's annual capacity to 14,000 units from 11,000 units.
Mercedes-Benz, though, is not stopping at the A and the B Class. It wants to launch more such cars in the 'affordable' price bracket. A compact sports utility vehicle and a compact sedan are also in the pipeline. By 2015, two out of every five cars sold by Mercedes-Benz will be compact cars.