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BMW cars to cost low as localization increases after new deals

Snapshot: BMW has entered into partnership with seven auto component suppliers which will help BMW increase localization at the company's Chennai plant.

BMW has some big plans for 2015 and to achieve market leadership in the luxury segment, they needed to curb increasing production costs. BMW has taken a major step by entering into partnership with seven auto component suppliers which will help BMW increase localization at the company's Chennai plant and price cars more competitively against the rivals.

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The seven companies with which partnerships are formed are - Force motors, ZF Hero Chassis, Draexlmaier India, Tenneco Automotive India, Valeo India, Mahle Behr and Lear India. As of now, engine and gearbox will be sourced from Force Motors, axles from ZF Hero Chassis; door panels and wiring harness from Draexlmaier India; exhaust systems from Tenneco Automotive India; heating, ventilating, air-conditioning and cooling (HVAC) modules from Valeo India and Mahle Behr, and seats from Lear India.

According to Philipp von Sahr, president, BMW Group India, “Since 2007, BMW Group has strengthened its commitment to the Indian market and has continuously increased the number of its locally produced car models. With a strong portfolio of locally produced cars, it is now the appropriate time for us to partner with major Indian auto component suppliers who will play a significant role in the future strategy of BMW Group in India.”

According to estimates, BMW will be benefited from a 120% reduction in taxes by increased localization for Imported cars and almost 60% on partly assembled cars. Also, the localization will reduce the waiting period of some of the components which otherwise take time. This will result in better after-sales operations and improve the production line too.

Robert Frittrang, managing director, BMW Plant Chennai, said, “BMW Plant Chennai takes pride in producing cars that have the same international quality standards as any of the 30 BMW Group production and assembly facilities worldwide. Highly skilled employees, advanced manufacturing processes along with state-of-the-art machinery and technology provide all the necessary ingredients to achieve these tough standards. We are confident that through our partnership with Indian auto component suppliers, we will set even higher benchmarks not only in quality standards but also in cost optimisation and value addition.”

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