Growth with profit, a new mantra for BMW in India
by G. Balachandar, Sriram Srinivasan and
CHENNAI: As the prospects for key auto markets across the globe sag, German
luxury carmaker BMW sees India as a favourable destination where it can
push for a profitable growth model rather than one focussed on volumes.“India is now the much more focused market in the global growth plan of
BMW Headquarters,” Philipp von Sahr, President, BMW, told The Hindu.
“If you see the worldwide situation, China is still growing, but it is
moderating. The U.S. and Europe are high volume markets, but no bright
outlook. Russia is in crisis. Brazil is disappointing at the moment.
“Though much lower in numbers, he said, India “offers a favourable growth
outlook over the next 10 years.” He compared India with China, which
some analysts believe could be left with excess capacities as its
economy has considerably slowed down of late after double-digit growth
rates for years. “Everybody is disappointed over Chinese market. Though
there is still growth in China, there are problems. But India has strong
potential. May be not like China in 1990s or so. But, we see a stable
good growth potential in India in the next 10 years. So, it makes sense
to invest here,” he said.
The world’s top-selling luxury car brand trails its German rivals
Mercedes-Benz and Audi in India. But Mr.Sahr doesn’t see it as something
to be bothered about. “We may be number 3 now. But we don’t care.
Volume alone won’t help for a sustainable profitable growth in India,”
he said.
He said BMW’s growth strategy involved getting dealers to make profits
too and improving customer satisfaction. Mr.Sahr, who took over as head
of India operations in October 2012, has often spoken against using
discounts to push volumes. He said the strategy to not chase volumes
came into effect in 2013.
“Of course, there is always a conflict between volume and profit
strategies. Even the top auto brand in Europe is debating whether to
focus on volumes to be the number 1 or to take up profitable strategy
and forget the number 1 position,” he said.
“This is because the markets are not growing. The big markets, in
particular, are stagnating. So, at the moment, the finance guys are more
powerful than volume guys.” Mr.Sahr pointed to India’s uniqueness as a market. He said ``it
shouldn’t be looked as a country or a market; it is more like a
continent.’’
