At a time when the auto industry is facing a slowdown, German luxury carmaker BMW says such times open up opportunities. After launching a series of cars, the luxury carmaker will focus on building the brand and strengthening its fundamentals to protect and grow the segment and its market share. Rudratej Singh, president and chief executive officer (CEO), BMW Group India, told T E Narasimhan that automakers should work on creating demand, instead of talking about utilisation. Edited excerpts:
How would the government sops, announced last week, help the auto industry, especially your segment? Will it push demand?
India is not a short-term story and we believe in its long-term growth. And, to be part of it, we must recognise that it will not be a predictable rising curve. There will be volatility, uncertainty, complexity and ambiguity in the short term. The government has done whatever it could and the measures will definitely improve sentiment, especially during the festival period. Whatever was announced will stimulate short-term demand. For long-term growth, the industry has a responsibility to help itself. The key thing is to not only talk about capacity utilisation, but also demand creation. It’s our job to create demand.
The sense of collaboration between the government and the private sector has to significantly improve to create end-to-end mobility.
How should product offerings change?
Mobility is transforming. It’s not an evolution, it’s a revolution. The auto sector has to recognise that it has to serve the needs of customers who are constantly evolving. There is a need to figure out mobility needs of the customers and cater to them. There is a paradigm shift in innovation and services. Whether it is shared mobility or fractional ownership, there will be new dimensions of mobility coming in. The mindset is still about products and ownership while usage dimensions are changing. The demand is there, but it won’t happen in the way we want it to happen. To create demand, you need to build brand and not push products.
How is the luxury segment faring?
The luxury segment has also been impacted in the short term, but it can be insular and actually lead the way to show brand growth, consumer growth and consumer sentiment improvement. We are not selling or moving steel. We are selling luxury and catering to emotion. Customers are ready to pay a premium if you recognise this.
How is BMW handling the drop in sales (first six months sales declined 4 per cent) compared to peers and the luxury segment fall.
The segment also got equally impacted, but BMW is relatively better because we have stuck to our own knitting. We’ve said that look, any potential slowdown in the economy or in consumption is actually an opportunity, not an adversity. We’ve consciously launched a product offensive, with continued product introduction, which lead the brand to cater to all segments and the portfolios show strength of the brand. Our price increases are likely to be 5-7 per cent in BSVI. We are confident not only to hold the segment share we have, but also increase our segment share by the end of the year.
What are the products driving BMW volumes?
Today, one third is coming from X1, one third from 3 series and the balance from SUVs and sedans.
BMW launched 7 products (BMW & MINI) in 2019? How many more are you planning in the next 12 months?
More than new launches, which of course will be there, we will focus on strengthening product portfolio and brand experience. This will not only help address the current challenges, but will help us to hold on to our current share. It would help the luxury segment growth, which in turn would help us.