BMW not in favour of offering discounts to gain volumes

Tuesday 15 October 2013, 12:37 PM by

Since the competition in luxury car segment is hotting up with new model launches, German manufacturer BMW seems to be quite upbeat about its future in the Indian car market. The company recently told that it would not be offering any discounts to improve upon its sales figures so as to focus on sustainable growth. Speaking on the trade practices of rivals, BMW Group India President, Philipp von Sahr was quoted as saying, “They can do what they want, but BMW is always going on its own way and we are not participating in this discount war because it damages the brand. The company is in a stable phase and the focus is not to build short-term volumes pushed by discounts, he added.”

BMW not in favour of offering discounts to gain volumes |
BMW not in favour of offering discounts to gain volumes

Since the Indian car market is going through a repressive time, major car companies have been offering significant discounts in the ongoing festive season to boost sales. During the year 2010, BMW overtook Mercedes-Benz to become the leading luxury car company of India but it was not long before its other German counterpart, Audi dethroned it. According to industry insiders, Audi has outperformed BMW in the sales figures of first quarter of this fiscal but since BMW has adopted the policy of sharing its annual sales numbers, the margin could not be determined.

Citing the importance to have healthy sales figures, Sahr told “Offering discounts is absolutely not our policy. If you give lot of discounts then you don't have profitability, then you cannot invest in the brand any more, sooner or later you are out of the market." He further added that instead of engaging in discount war, the company would like to strengthen its dealership network and build new plants. "We are looking at what is our long term vision -- develop dealers, optimise processes, invest on plants and invest on training and so on," he added.

On asked about the possibility of BMW raising prices of its cars, Sahr replied "If it's necessary we would go for it. We go for profitability, what we will never do is to have negative contribution margin on the cost." It must be noted that BMW had already hiked the prices of its vehicles twice in the current year with one in January and the other in August because of the sharp decline in the value of rupee against the US dollar.

The President of BMW India also stressed upon the importance of Indian car market saying that it is vital for the group's operation in long term growth prospective besides Chinese, Brazilian and Russian markets. "India is a strategic, very important market. Even if the volume may be lower at the moment than some European markets but here in India you have a long term growth, like China, Brazil or Russia, so these are the emerging growing markets. We fully believe in the long term growth in the Indian market even though economical situation this year is not so easy," he said.

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