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It’s high time govt removed cess on luxury cars: Vikram Pawah, President, CEO BMW Group India – ET Auto

Q. How do you see the luxury segment growth in India this year?

I see that the demand is coming back very strongly post-COVID. Inquiry levels are high, traffic in the dealerships is better, and engagement levels are promising. Decision-making also is very quick now.

Demand for our products in the first eight months has been fantastic. Sales of our cars grew by 51% and of motorcycles by 48%. So we had record sales in the first eight months of the current year. I expect this trend to continue as we enter the festive season.

Q. In 2018, you had peak sales of over 10,000 units, do you expect to cross that this year?

Absolutely, this is our 15th year of operation in India. And I want to finish it with record sales.

Q. What are your estimates for the Indian luxury segment? How do you see its panning out?

I have always said that India has a very small premium car market, less than 1% of the total industry. In the neighbouring countries the market is 5% to 8% of the industry.

That is the kind of headroom we talk about. You know, the market for luxury cars could be 100,000 to 150,000 units. That’s the potential it has, maybe even bigger, as the economy grows.

In the first 8 months, sales of our cars grew by 51% and that of motorcycles by 48%.~

I think there are probably a couple of deterrents. One is the absence of a fiscal or taxation level playing field. You know, the cess that was supposed to be only for a couple of years after the introduction of GST, still remains. Such things skew the demand to some degree.

However, some of the infrastructure needs are improving. We heard at the SIAM conference, about the kind of road infrastructure that’s going to take place, 26 new highways or expressways. So that’s really good because I think great infrastructure allows people to enjoy great cars.

The Indian luxury segment has the potential for 1.5 lakh units.~

Q. You’re talking about the over 150,000 units market for the luxury segment; what kind of pie do you think BMW will have?

If we reach that market we will make sure that BMW drives the market.

Q. What is driving growth in the industry?

When I look at it, it is not just one product that sells or one region that drives growth. Of course, SUV sales are growing, no doubt about that. Right now we are seeing a 72% growth in SUVs. At the same time look at the sedans, and the three-van limousine, a new introduction. They are also giving us a lot of growth.

The five series and the six series that we launched recently are growing and are high in demand with long waiting periods at the moment. So it’s all across and when you look at the cities, there’s a good distribution, 50% comes from tier one cities or the top 10 cities, and the balance 50% comes from the next 100 cities. So that’s also a very good balance for us.

Right now we are seeing a 72% growth in SUVs, says Vikram Pawah
Q. Electrification is the new buzzword. McKinsey-ACMA report suggests that up to 15% of electrification is possible in the mainstream passenger vehicle segment. How will it be for the luxury segment?

I think the luxury segment will have higher penetration for sure. Because I think any new technology gets adopted in the luxury segment much earlier. Of course, we have great products. As you know, we are the only manufacturer in the country that offers three distinct electrified products to our customers.

The luxury segment would have seen higher penetration of the electric than the mass segment.~

When we launched three products in 180 days this year, we got fantastic responses. We sold them out in minutes, if not in seconds, and every time we launch a new batch of production, it also sells in seconds. There is great demand. On the demand side, I’m already at 10%.

Q. Great. You have a joint venture with the TVS Group and that is doing very well. How do you want to leverage it to the next level?

TVS has been a great story for us. We started with the 310 GS and the 310R, and recently we launched the 310 RR. All these three formats have given fantastic responses. For example, when we launched the 310 RR a month or two ago, within 15 days, we got 1000 bookings. And in that segment getting 1000 bookings in such a short time was a phenomenal result. Of course we will continue to develop even more products with them in the future and you’ll get to know.

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