BMW was one of the fastest growing automotive brands in India last year. It clocked 25 percent growth, with sales touching 9,800 units, making it the second-highest luxury carmaker in the country behind Mercedes-Benz. This came despite additional cess being levied on luxury cars, over and above GST.
However, the German company may not be able to retain the same momentum this year, as the government has hiked customs duty on completely knocked down (CKD) kits from 10 to 15%.
While BMW has assembly operations in India, it imports parts of vehicles from Germany.
President of BMW India, Vikram Pawah, spoke to Moneycontrol and shared his plans for the year head.
Q. 2017 was a very good year for you, how have the first three months this year been?
A. It’s been fantastic. In 2017 we delivered 25 percent growth and I was happy that finally the industry grew. And now I can promise you that in the first quarter we will deliver double digit growth for sure.
Q. Has there been any impact of CKD customs duty hike on sales?
A. Obviously there has been an impact of the CKD hike. When customs duties go up, then manufacturing costs go up. It’s not something that we can absorb.
Q. Have you raised prices yet?
A. We did not increase our prices from February 1, when the duties went up. Our prices will increase from April 1, which will range between 3-5.5 percent depending on the vehicle's model.
Q. Will the price hike impact growth, if yes then by how much?
A. Its very difficult to estimate that. We would have grown faster, if there was not hike in duties. Such things tend to dampen buyer spirits. We had witnessed a similar trend when GST cess was increased last year. Yet, we are investing in our strategy to ensure we grow.
Q. Will you reconsider your plans?
A. No. We are very clear about it. I am confident about India that it is a market that will deliver in the long run. So for me being in India means being here for the longer run. Yes I want the policy changes to be more stable. We will continue to hold dialogues with the government to understand that. We are here for the long term and how we will benefit mutually.
Q. Any planned investments in the near future?
A. We increased our investment last year to Rs 12.5 billion.
Q. How many vehicles were launched last year and what do you have to offer to the Indian market in 2018?A.
Last year we did the 5 Series. This year we showcased eight products which will be launched during the year, but the most important was the 6 Series GT. The 3 Series will be launched shortly followed by the new Countryman. On the niche side, we launched the M5. We launched the petrol version of the X6. We launched two mid-sized adventure bikes as well.