BMW inks seven deals to increase localisation

BMW has entered into various partnerships with seven leading Indian auto component suppliers for sourcing parts to enable increased localisation of its cars manufactured at its plant in Chennai. Increased localisation will pit BMW more competitively in the Indian market against its rivals, and help reduce cost.

The German carmaker has inked these partnerships with Force motors, ZF Hero Chassis, Draexlmaier India, Tenneco Automotive India, Valeo India, Mahle Behr and Lear India. With this, BMW will be able to increase localisation by as much as 50 percent. BMW mostly sources the engine and gearbox 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.

Increased localisation will also help BMW to cut down on taxes, which is 120 percent on imported cars and 60 percent on partly assembled cars, as well as improve the workshop and aftersales operations as the waiting period for some imported components is high.

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.”

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.”

BMW India’s plant in Chennai started operations in March 2007, and currently produces the 1 series, 3 series, 3 series Gran Turismo, 5 series, 7 series, X1, X3 and X5. BMW India, which is currently facing aggressive competition in the luxury car market in India, sold a total of 6,812 units in 2014, compared to Mercedes-Benz India's 10,201 units and Audi India's 10,851 units.

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