German luxury carmaker BMW is evaluating over 100 component manufacturers in India to outsource engines and chassis for its global manufacturing operations, according to a board member.
"We are impressed with the quality of die casts and forgings in India that we use for our global operations. The quality of products from second- and third-tier is impressive. Once our pilot project evaluating 100 ancillaries is completed we will outsource engines and chassis for our cars," said Ind Herbert Diess, who is on the BMW AG board.
The German car-maker's international purchasing office in Gurgaon, Haryana, currently sources motorbike handles and die casts from India. The India outfits of multinationals like Mico Bosch and Conti also supply it software solutions.
The car-maker sells the 3 and 5 series assembled from CKD (completely knocked down) kits at its plant in Chennai.
BMW's Indian operations added 200 people in 2007. "The number of jobs we add in India depends on our market growth," said Norber Reithofer, chairman of the BMW Board of Management.
"India is an important growth market for us. Our estimate is that by 2015 the market for premium cars will reach 10,000 units a year. We also plan to increase the share of our CKD units in the country," Reithofer added.
"BMW sports utility vehicles like the X3, X5 and the 7 series could be locally assembled at the Chennai plant if we reach a critical number of 500 units," said Frank Peter Arndt, head of production.
The company also plans to launch the Mini next year to coincide with the iconic small car's 50th anniversary. However, Kay Segler, senior vice- president, Brand Management Mini, said the process of homologation (adapting to Indian conditions) is time-consuming and expensive.
"It costs about Euro 200,000 and takes six months to complete the homologation in India, which pushes up our cost and delays the launch of this compact car in India," Segler said.
According to BMW, the small car could cost between Rs 25 lakh and Rs 30 lakh (Rs 2.5 million and Rs 3 million) and will be available as a CBU. The company said the Mini's diesel engine could deliver 25 km to the litre under test conditions.
The Mini engine will be supplied by Fiat. "Mini engines will also be supplied by other vendors. We are in discussions," said Klaus Draeger, another board member.
Meanwhile, the company is also mulling globally the option of launching a fourth anchor brand under which the auto major's future "green concept" car will be housed.
The fourth brand is part of the car maker's "Project I" to offer new environment-friendly transportation technologies over the next five years.
Addressing the group's Annual Accounts Conference in Munich, Reithofer said, "Project I is fully independent and even free to act beyond BMW structures. Whether this will require a fourth brand or not will be decided at a later date."
Not to make mobikes in India
Although India and China together constitute the world's largest motorcycle markets , BMW has no plans to manufacture or actively market its high-performance motorcycles in India.
"Motorcycles in India and China are used primarily as vehicles of mass transportation so the market isn't attractive enough for us to introduce our high-performance motorcycles," said Herbert Diers, BMW AG board member, adding, "We could sell limited numbers through an importer."
The reporter was in Munich at the invitation of BMW.