BMW India is the undisputed leader in the luxury car segment in India, beating its country cousins Mercedes-Benz and Audi. The company?s India head Andreas Schaaf spoke to FE?s Rajat Guha in Munich, sharing several initiatives to strengthen its position further. He said the company plans to start its own production facility in India instead of just assembling cars as is done currently.

How do you plan to strengthen your position as the number one player in the Indian luxury car market?

We will ramp up our existing capacity at the Chennai plant to 10,000 units in 2011-12 at an investment of euro 17 million. If the market continues to grow at the same pace, we could consider looking at a second production facility by 2015. The company, which so far has been assembling the 3 series, 5 series, and X1 models in India, is looking at assembling the X3 model in the country by middle of the year.

What are your plans on expansion of dealership network in India as dealership numbers have to increase in order to pace up with production increase?

BMW is expecting tier II cities to drive its second phase of volume growth in India. In an aggressive push to grow the luxury car market in the country, we have extended the dealership network to 20 cities and plan to double the number by next year. We grew about 60 % last year to 6,246 cars and 80% of this volume came from Delhi and Mumbai. This year, we expect the contribution of Delhi and Mumbai to drop to around 40 % of our sales while the rest will come from tier II cities.

Please throw some light on the vehicles you plan to introduce in India this year?

BMW plans to drive in three new products this year, including the popular 6-Series car 650i Convertible, which will be launched in Udaipur later this month. This product combines the feel of an SUV with premium branding and we feel it has a ready market in India. Another 6-Series car, 650i Coupe and the X3 will be launched later.

How have you been faring in secondary businesses like finance and used car?

We have already launched our used-car business on a pilot basis with the country?s two dealers and we are in the process of fine tuning the business before we finally roll it out in April. We are at present putting in place a vast IT system to have a full database of our customers. The dealerships will also offer buyback and exchange facilities to loyal BMW customers. As far as our finance business is concerned, the company?s car finance arm, BMW Financial Services, has managed to corner 50% of the total BMW sales within the first two months of its launch. We will also start car leasing system in India.

To kick start the process, we will begin with corporate leasing, a system regular in the US and Europe. As the market matures we will extend leasing to individuals as well.

?(Travel for this interview was sponsored by BMW)