BMW to launch its NBFC in India by mid-2010

German Lxury car maker BMW is a late entrant into India, but it has managed to take a lead over its arch rival Mercedes Benz this year. CNBC-TV18's Sumantra Barooah reports on the company's plans to sustain its status as the number one luxury carmaker in the country. BMW plans to launch its non-banking financial company (NBFC) in India.

Here is a verbatim transcript of his comments on CNBC-TV18. Also watch the accompanying video.

Peter Kronschnabl, BMW'S India chief will have additional responsibilities starting mid next year, when BMW launches its non-banking financial company (NBFC) in India. Nearly 70% of all BMWs bought in India are via finance, and in most other countries, BMW operates its own retail financing arm to service customers.

Peter Kronschnabl, President, BMW India, "I am not ruling out that we'll have other alliances with banks but the retail financing will not be in cooperation with another bank, that will be done completely in-house with BMW Financial Services India."

Despite the slowdown early this year, BMW has seen a surge in the sale of luxury cars, and its market share for the segment has climbed to 43%. Quite a few of those sales, have come from surprising geographies.

Kronschnabl added that the state of Gujarat was the biggest surprise of the year. "If you would have only built a dealership based on the numbers which we had of the luxury car market in the past, we would have never thought of selling 165 cars to customers from January - September 2009, because the luxury car market in Gujarat in the past years was only 50-60 units a year.

As volumes grow, BMW India will invest to ramp up capacity at its Chennai plant which can produce 3,000 cars annually with a single shift now. It has crossed the 2700 mark so far during this year, with Mercedes Benz at 2313 and Audi at 1333 units.

The growing market for luxury cars like this Rs 90 lakh BMW X6 is what's fuelling the bullishness of their makers. 51 of these have found customers since deliveries started in July. BMW, which is currently leading the pack expects the segment to cross 9,000 units this year, and more than double to 20,000 units by 2015. Hope that the Indian highways are being built at the targeted rate of 20,000 kilometers a year for these cars to be driven on them.