German luxury carmaker BMW is betting big on its soon-to-be launched pre-owned car business in India and hopes that this will contribute at least 30 per cent to its total sales in the country.
BMW plans to launch dealerships for its pre-owned car business - ‘BMW Premium Selection’- in all major metros across the country as part of the strategy. The business will kick off in April this year.
“If we are able to establish our brand nationwide, the used-car business should comprise at least 30 per cent of our annual sales,” BMW India President Peter Kronschanabl said.
Last year BMW sold 3,619 units in India, becoming the number one luxury carmaker ahead of rival Mercedes which sold 3,247 units. In 2010, the company is aiming to cross the 4,000 units mark in sales.
‘BMW Premium Selection’ will have its first dealership in Chennai in April, followed by one in Gurgaon during the third quarter of the year.
“Our target would be to open dealerships for the used-car business in all major cities of India but I do not want to fix any time limit. We want to create an entirely new business with our used-cars,” Kronschanabl said.
He, however, added that only the company’s cars which were purchased since the launch of BMW’s Indian operations in 2006 will be accepted from the owners.
The vehicles will be selected from the owners after a full inspection by BMW engineers and technicians. The firm will give a warranty for the cars to new customers.
BMW has sold over 8,000 units in the Indian market in over last three years and it is targeting a new section of customers who are still not in the luxury segment but have power to purchase a car worth around Rs. 20 lakh.
“In a study done in 2007, we found that on an average a customer uses a premium or luxury segment car in India for 5.6 years. We want to bring down that time, possibly to 3-4 years,” Kronschanabl added.
He said the new venture will add re-sell value for the BMW brand and “so it makes the entire business value and philosophy more transparent.”
The company already operates the BMW Premium Selection business in Europe, the US and Russia.
Meanwhile, BMW’s Financial Services is also likely to be operational in India by the middle of the year.
“The licence for the status of Non Banking Financial Institution should come from the RBI by middle of May. Our aim is to offer a complete insurance solution to customers including retail finance and commercial finance,” he said.
The BMW Financial Services India, with headquarters in Gurgaon, is intended to offer complete insurance solution to customers including retail finance and commercial finance.
Last year, the company had announced plans to invest USD 50 million over 24 months in the Financial Services venture.
“It will also be open for non-BMW products also. Even they can apply for finances from it,” he said, however, adding that at this time there is no proposal to make the Indian financial services operations part of its proposed European Bank.