BMW to invest more in local assembly despite duty hike on imported kits
, ET Bureau|
Feb 22, 2018, 11.42 PM IST
NEW DELHI: German luxury-car maker BMW will continue to invest towards locally assembling vehicles in India, despite an increase in customs duty on imported kits.
The company, which currently assembles eight models at its facility in Chennai, is set to commence local production of the MINI Countryman later this year. Plans are afoot also to launch a locally manufactured sports utility vehicle, BMW X4, sometime next year.
BMW Group India president Vikram Pahwa said uncertainties in the regulatory environment had made business planning difficult, but the company was committed to growing in the domestic market. “(It is a) very tough environment to work in. Obviously, if these things are a little bit more stable, we can be more confident,” Pahwa said. “But having said that, because of the product launches we have had this year, we are confident that we will deliver growth.”
The budget announced on February 1 proposed to increase the customs duty on motorcars and motorcycles imported as completely knocked-down units (CKU) to 15% from 10%. Almost 95% of the about 40,000 luxury vehicles sold in India a year are imported in the CKU form and then assembled locally to escape steep duty on vehicles imported as fully built units. The Indian market for luxury cars and SUVs grew in strong double digits in 2017.
But the increase in vehicle prices on account of the higher import duty will put pressure on sales now, said several industry insiders. BMW India, on its part, had held off a price increase and would only make it effective in April.
As far as electric vehicles are concerned, Pahwa said the company didn’t see the need of a specific policy, but would urge the government to lay a roadmap for infrastructure development, such as “in which cities, by when, what enablers will they put in place to make that happen.” BMW India would look at bringing plug-in hybrids to cut down on emissions.
The company, which currently assembles eight models at its facility in Chennai, is set to commence local production of the MINI Countryman later this year. Plans are afoot also to launch a locally manufactured sports utility vehicle, BMW X4, sometime next year.
BMW Group India president Vikram Pahwa said uncertainties in the regulatory environment had made business planning difficult, but the company was committed to growing in the domestic market. “(It is a) very tough environment to work in. Obviously, if these things are a little bit more stable, we can be more confident,” Pahwa said. “But having said that, because of the product launches we have had this year, we are confident that we will deliver growth.”
The budget announced on February 1 proposed to increase the customs duty on motorcars and motorcycles imported as completely knocked-down units (CKU) to 15% from 10%. Almost 95% of the about 40,000 luxury vehicles sold in India a year are imported in the CKU form and then assembled locally to escape steep duty on vehicles imported as fully built units. The Indian market for luxury cars and SUVs grew in strong double digits in 2017.
But the increase in vehicle prices on account of the higher import duty will put pressure on sales now, said several industry insiders. BMW India, on its part, had held off a price increase and would only make it effective in April.
As far as electric vehicles are concerned, Pahwa said the company didn’t see the need of a specific policy, but would urge the government to lay a roadmap for infrastructure development, such as “in which cities, by when, what enablers will they put in place to make that happen.” BMW India would look at bringing plug-in hybrids to cut down on emissions.
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