German luxury car maker BMW entered the Indian market in 2007, 13 years after Mercedes. But in 2009, BMW overtook Mercedes and became the number one selling luxury car brand in India. Compared to its key competitor Mercedes, BMW has got a more youthful brand image which is playing a key role in its success in India. In December 2010, the brand launched its X1 series with an aggressive pricing of Rs 22 lakh (ex-showroom). With this BMW changed the entire game in the luxury space by opening up the below Rs 25 lakh section. Other brands followed suit, Audi and Volvo launched models in the below Rs 25 lakh segment. Mercedes too is planning to get itâ€™s A class and B class to compete in this segment. In a conversation with Pitch, Andreas Schaaf, President, BMW India shares his outlook of the Indian luxury car market, BMWâ€™s plans and moreâ€¦ Excerpts:
What is your outlook for the luxury car market in India?
The outlook for the luxury car market in India is very optimistic. India has a lot of market potential that we have not reached yet. A lot of forecasts say that there will be 200,000 luxury cars in India by 2020 which is twenty times of what has been sold here last year (23,000 units). There is a lot of optimism and a lot of potential to grow further.Â And everyday you see some thing or the other getting announcedâ€¦ there are numerous developments happening in this space and that itself shows the kind of potential this market has.
From your perspective how different are the Indian consumers vis-Ã -vis their western counterparts?
What I find in India is that the customer expectation level is very high. It is even higher when it comes to luxury products. In India people expect to get value for money. When dealing with premium customers one has to be very careful in all aspects of the operations otherwise one cannot make a mark in the premium brand ballgame in India.
The entry level luxury car segment is witnessing huge growth. BMWâ€™s X1 series was the first car to be launched in this segment. What made you make this decision to get in this segment?
We were the first luxury automobile brand in India that deliberately decided to launch a car below Rs 25 lakh. We realized that there is a huge scope for the entry level market in India. More and more people are having better paying jobs more disposable income and rising aspirations. We realized we have to offer something to this consumer segment, we cannot leave this growing segment and concentrate only on those that have more money which is a limited number. So we decided to change our strategy and offer something to get connected to this growing segment.
Any plans to launch more models in this below Rs 25 lakh segment?
There are no concrete plans to launch models in that bracket. Though, India is more a small car market and keeping that in mind, I would not neglect that segment, but as of now we have no plans to launch more models in this segment.
BMW also launched the Mini Cooper this year. You have a separate distribution network for this brand. Why have you chosen that?
Mini Cooper is positioned as the top premium car brand in India and it is the first small car brand that we have launched in this market. We have made no compromises on the retail facility. We have deliberately not put this car in the BMW showrooms. Rather, we are building separate exclusive Mini Cooper showrooms across the country which is very essential. We, currently,Â have three Mini Cooper showrooms two in Delhi and one in Mumbai. We know that, for the success of the Mini Cooper range, it is very essential that we develop its own brand potential.
In the past 12 months many super luxury and sports car brands like Ferrari, Aston Martin, Bugatti etc. have entered the Indian market. Do you think these brands can redefine the Indian luxury car market like BMW did a few years back?
I donâ€™t know whether they are redefining the luxury segment or not. India is growing and developing fast so it is natural for it to attract more players. We expect more and more premium players to enter the market in the next few years.
How do you see the competitive landscape in this segment?
There are all strong brands in the market and there is not a single product in the market that is dead or not up to the mark. All of them have their heritage and all of them are strong competitors and there is no doubt about it. But we are on top and are a more sophisticated brand having sophisticated product and we think that we are better than the rest.
Also, one should remember that India is a very competitive market where we should not forget that it is a growing market and we all expect that the Indian market will become bigger in terms of cars and also become bigger in terms of premium cars available to the market. Of course there will be more players who will try to get into the market but there is a lot of space to grow. There is competitionÂ but it is good.