Make in India: Luxury is here to Stay

Philipp von Sahr, President, BMW group India, spoke with Hardnews about the ‘Make in India’ programme and the company’s future plans in India
Hardnews Bureau Delhi 

The ‘Make in India’ programme was supposed to make it easier to do business in India. What has BMW’s experience been?

The Make in India initiative has created a certain positive vibe in the business environment. Businesses are ready to take this forward and now need to be supported with on-ground facilitation. The availability of the right resources, manpower and skills is present. We believe that policies promoting ease of doing business will further enhance India’s viability as a global business destination and will attract new investors towards setting up operations here. At the same time, existing investors will rethink before shifting and outsourcing operations to other countries. 

Many foreign companies complain that the tax regime is unpredictable. What should India do to
reassure investors?

The taxation regime needs to have a stable outlook. Frequent changes in government policies and tax structure are not viable for business, as realignment involves a lot of effort, time and cost. A set long-term direction in this area helps businesses to create and implement long-term strategies, which in turn leads to sustainable and profitable growth. Companies will commit to the Indian market in a much stronger way if taxation laws are firm, clear and transparent. 

You have experience of working in different countries in your long career. What are your views on the factor endowment (capital, labour etc.) in India and whether the country has the capability to produce world class products?

India is the seventh country where I have worked and in my experience it can compete with the best global players when it comes to quality and cost efficiency.

BMW Plant Chennai takes pride in producing cars that have the same international quality standards as any of the 30 BMW Group production and assembly facilities worldwide. Highly skilled employees, advanced manufacturing processes, along with state-of-the-art machinery and technology, provide all the necessary ingredients to achieve these tough standards. 

How have those capabilities affected your business?

BMW Group has further strengthened its commitment to the Indian market by increasing the level of localisation at BMW Plant Chennai to up to 50 percent. The cars locally produced at BMW Plant Chennai now feature very strong local content. Strong localisation benefits BMW in terms of cost optimization and value addition. At the same time it creates business and profitability for our suppliers resulting in a win-win situation. 

What are some of the sources for that local content?

Some of the major auto components sourced for local production at BMW Plant Chennai are: Engine and Gearbox from Force Motors; Axles from ZF Hero Chassis; Door Panels and Wiring Harness from Draexlmaier India; Exhaust Systems from Tenneco Automotive India; Heating, Ventilating, Air-conditioning and Cooling Modules from Valeo India and Mahle Behr and Seats from Lear India.

In addition, The International Purchasing Office (IPO) established at BMW India’s Headquarters in Gurgaon identifies and assesses potential suppliers for BMW, MINI, and BMW Motorcycles, taking into account BMW Group’s requirements for quality, technology and logistics. 

What is your understanding of the Indian automobile market? In which direction is the market growing?

The Indian luxury market is still at a nascent stage, but it has immense potential with rising purchasing power, growing aspiration for luxury brands and evolving lifestyles. Considering that India has a population of over one billion, there is more potential for growth. Along with the metropolitan centres, we foresee growth potential amongst the young achievers, predominantly from Tier I and Tier II cities, whom possess a dynamic attitude and are technologically savvy. 

Is the luxury market unique in India?

Luxury is a constantly evolving and subjective concept and is not a new experience to India. The experienced luxury customers like the royals, industrialists, celebrities and the traditionally rich families have always embraced the finesse of luxury brands and continue to do so. At the same time, the aspiration of thousands of young entrepreneurs beats in the centre of emerging India and has fuelled the luxury market in the country.

Not only have the ‘nouveau riche’ started opening up to luxury, but there has been a tremendous growth within the existing patrons or the traditionally wealthy families of India. A car is no longer treated as a ‘necessity’, but as a lifestyle choice. The number of cars in a family sometimes is higher than the number of family members themselves. 

How do you develop relationships with Indian customers?

To market an aspirational car brand in a country as diverse as India, it is critical to create memorable experiences and constantly stay in touch with consumers through premium brand engagements.

Drivers of luxury cars want to differentiate themselves. To meet the expectations of the luxury consumer, BMW India offers an enhanced experience through superior quality products, luxurious dealerships, outstanding customer service, as well as exceptional and engaging events for our clientele in India.

All our customers are very different and we remain absolutely committed to meeting all their needs. Being a price-sensitive market, the country has seen a huge rise in the entry-level or the compact luxury car market. This segment gives the opportunity to the customers to enter the world of a luxury brand at an entry-level price.

At the same time, there are customers who want to own only the best-in-class. For these customers, BMW offers flagship cars, performance cars, coupes and convertibles. These customers want to be further differentiated even within the luxury circle. 

Have you developed any special marketing strategies for India?

To increase outreach, we have introduced the innovative concept of BMW Mobile Showrooms. A travelling dealership, the BMW Mobile Showroom enables customers in Tier II and Tier III cities not covered by the existing dealer network to experience the BMW brand, test drive vehicles, interact with product experts and avail promotional finance offers from BMW Financial Services.  

How do you view your competitors?

At BMW, we believe preserving the circle of ‘Sheer Driving Pleasure’ is essential for success. The circle of ‘Sheer Driving Pleasure’ can only be completed by introducing innovative products, building world class dealerships, maintaining state-of-the-art equipment, motivating and training a workforce that engages passionately with our premium clientele and delivering service standards ahead of their time.

We want to be the leading luxury car company with ‘Delighted Customers’, ‘Strong Partners’ and most important ‘Sustainable Leadership’. We offer our customers exclusively authentic premium luxury products, which are differentiated by their emotional appeal, uncompromising engineering, innovative technology and quality.

Focus on customer satisfaction will prove to be the key differentiating factor between us and the competition now and in future. BMW India has ranked highest in Sales Satisfaction in the Indian luxury car segment for the second consecutive year in J. D. Power Asia Pacific Sales Satisfaction Index Study 2014—Luxury.