Pricing Strategies | Bavarian Motor Works | Group-01

March, 2007 : BMW sets up Production Plant in Chennai

Timeline | BMW in India

November, 2010 : BMW enters Pre-Owned Car Business2010-11 : BMW becomes top selling luxury Car in India,

Surpasses Mercedes with 42% Market Share2013 : Customs Duty controversy regarding Imported Semi-

Knocked Down cars in India, followed by 5% price hike2014: BMW tops Customer Satisfaction Study, decides

not to release Sales data officially2015: ‘Make In India’ wave | Increased Localization of

X5,MINI range | Plans 15 new launches this year

STP

Industrialized Areas

Age Group: 25-40

Safety & Satisfaction

InnovationPowerful

Brand ImageTechnology

PerformanceCustomer Satisfaction Quality

Exclusivity Sheer Driving PleasureReliability

Premium-tization

Consumers triggers the demand & are willing to

pay high price for the perceived quality

Varying Product Range at Different Price Levels (India)

BMW Car Model Approximate Price Range (INR)

1 Series 26-30 LacX1 Series 31-38 Lac3 Series 35 Lac - 1.2 Cr.

3 Series GT 44 LacX3 47-52 Lac

5 Series 48-60 LacX5 75 LacZ4 75-77 LacX6 1.15 Cr.

6 Series 1.15-1.22 Cr.7 Series 1.08-1.98 Cr.4 Series 1.27 Cr.I8 Series 2.8 Cr.

Latest Launch : MINI Series

‘Profitability’ over ‘Volume’ strategy in India

Till 2012, BMW was extremely aggressive on volumes and had discounted some of its model like the X1 dramatically and had introduced corporate editions of 3 Series, to buy the market. But the move hurt the brand image.

Now, the company’s focus is not on volumes, but on a Sustainable & Profitable growth in India. And it is willing to let go of volumes at the cost of profit.

BMW wants to focus on the top of line products, like the i8 Hybrid launched in Mumbai (at Rs 2.29 crore) recently and its M models sports cars and cars upwards of 3 Series. Interestingly, the 1 Series and X1 helped BMW three years ago to climb to the top position in India, from where it has dropped to the third by the end of 2014.

The entry luxury segment where cars are priced between Rs 25 lakh and Rs 45 lakh already makes up for 20-25% of Mercedes Benz's India sales, compared with 5-10% at BMW. That’s why- the top of the pyramid luxury and performance car segment where vehicles are priced between Rs 50 lakh and Rs 2 crore becomes BMW’s prime focus market for nearby future.

BMW has successfully implemented 50 % increase in localization of its products. Cars like BMW 1 Series, 3 Series, 3 Series Gran Turismo, X1, X3, X5, 5 Series as well as 7 Series model that are locally produced will now be available at low cost (Reduced Price up to 5 lac INR).

India remains the most ‘Aggressive’ market for BMW. They’re following ‘Production-follows-Market’ strategy by offering more range of luxury cars ( locally mfg. at reduced cost).

Launch of MINI Cooper & Countryman series in the range of INR 29-36 Lac.

Recommendations

To Maintain Premium Luxury

Car Image & Maximize Profits

Reduce Mfg. Costs by Technological

Innovation

Expansion into Emerging & Developing Countries

Don’t Reduce funding for R&D

Add more smaller/cheaper

cars like MINI Cooper

• Pricing should remain Premium for High-end Models

• R&D will help in developing further automation that can reduce Mfg. costs, Investment in Emission Reduction Technology

• To support local manufacturing initiatives of countries like India

• India, China, African Fuel producing Countries, Australia etc.