BMW starts assembly of MINI in Chennai; prices may drop by Rs 10 lakh

Stepping up the fight for a pie in a slumping car market, BMW has started assembling its luxury small car MINI models in Chennai in order to meet "the steadily increasing demand", according to various media reports.

The local assembly will make the MINI Countryman cheaper by Rs 10 lakh, a Mint report said. The car is now selling in the range of about Rs 34-37 lakh. The price at the lower end is likely to be Rs 23.50 lakh, the report said.

"The vehicles manufactured at BMW Chennai will fulfil the same quality standards that apply to production of BMW Group models worldwide," the report quoted from a BMW India statement.

 BMW starts assembly of MINI in Chennai; prices may drop by Rs 10 lakh

Foreign carmakers are increasingly taking to local assembly of completely knocked down kits as this helps them save on customs duty.AFP

Foreign carmakers are increasingly taking to local assembly of completely knocked down kits as this helps them save on customs duty.

The duty on imported cars is 100 percent of their cost. If cars are made in India with imported engines and gearboxes, the duty is 30 percent. The duty is just 10 percent, if the carmakers can increase the localisation.

According to a recent report in The Economic Times, the market for BMW, Audi and Mercedes Benz cars have grown five times in three years as they have been able to price some of their models sub-Rs 30 lakh models because of local production.

BMW already assembles the 3 Series, 5 Series, X1 and X3 in the Chennai unit.

According to the ET report there are plans to start making the 7 Series too.

"It would help us to increase the value for our customers and keep our prices competitive," BMW Group India President Philipp von Sahr was quoted as saying in the report.

It says industry officials expect the sales volume of luxury vehicles to double to 50,000 by 2015 from 25,000 in 2012.

The interesting aspect is that the luxury carmakers are stepping up their fight for a market that is witnessing a slump.

As Hironori Kanayama, India chief of Honda Motor Co, says in this Reuters report, they must be keeping calm and carrying on.

Updated Date: Dec 20, 2014 19:04:17 IST