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“It was not Worth Jeopardising The BMW Brand for The Sake of Volumes.”
For years Together, The Indian Luxury car market had always seen Mercedes Top The Charts. The year 2009 saw a change in The form of BMW. From the 3 Series to The Gran Turismo, BMW has done well to Establish itself in The Domestic Market. And now, it’s betting big on The New X1. Will it prove The Crowd-Puller for BMW?
Issue Date - 03/02/2011
Two years in a row, at the helm – it has been quite a ride for BMW AG in India. Scoring over the #2 Mercedes-Benz, BMW sold 6,246 cars in India during FY2010 – a 72.6% y-o-y rise in sales for the German. In short, it was all good news in the making when Andreas Schaaf assumed office in May 2010 as President of BMW India. But as big a challenge as it was for his predecessor Peter Kronschnabl to take BMW past other luxury car sellers in the country, Schaaf’s task going ahead to retain the crown, is no less difficult. All of 40 years, Schaaf, has spearheaded BMW’s sales and marketing division across geographies like South Korea, Asia-Pacific, Africa and Eastern Europe during his 15 year-long stint at BMW. He joined the auto major while he was still completing his doctoral thesis at the University of Bayreuth, Germany, and has only worked with one company during his entire career. B&E catches up with the ‘one-company’ man who is determined to keep BMW ahead of the pack, against all odds. Excerpts from the interview follow:

B&E: Talking of your latest launch – the X1, which has been positioned as an entry-level model for BMW lovers in India. What are your expectations from it, as far as sales are concerned?
Andreas Schaaf (AS): As you rightly mentioned – it is the “cheapest” model that BMW India has in offer today. And with the kind of initial response that we have observed for the product, we are confident that it will add tremendously to our sales total. Interestingly, even before we formally announced the launch of the X1 in India, we had received close to 1,000 unit-bookings. As far as inventory is concerned, at present, the situation is such that for fresh bookings, no deliveries can be possible till April 2011. We expect it to be the best-seller in our portfolio.

B&E: Confident as you sound, would you take the X1 as the competition killer, given that the #2 Mercedes doesn’t have anything remotely close to it?
AS: Actually, Mercedes can always make a comeback, as everybody is playing hard in the Indian market and everyone knows that things can change overnight. Although they don’t have a similar product in their portfolio right now, but they might come up with ideas. You never know.

B&E: How important is market share to BMW India?
AS: India is a growing market and BMW India is not fighting for market share. We are actually working towards creating the market everyday. Being on top gives great motivation to employees, customers and dealers. We were first able to grab the top slot at the end of 2009. We repeated the feat in 2010. In 2010, we embarked on the second wave of offensive play in India, with a very carefully planned and passionately executed business strategy. As was required for BMW Group’s future success in India, it worked.

B&E: Like in 2009, the company again overtook Mercedes in the second half of 2010. What major strategies did you adopt to repeat this feat?
AS: We went the way we wanted to go. It is not about an arrogant organisation but about a self-confident organisation. We wanted to be #1 as we have always perceived that as a symbol of success. Obviously, people got nervous in the beginning of 2010, as we were running behind for months. But we did not panic and hence, did not do anything stupid. We knew that there was a new 5-Series hitting the market in the second half, which would help cover the gap. And it did just that.

B&E: The luxury car market has shaped up well in 2010. What kind of growth are you expecting in 2011?
AS: We are very bullish for next year. However, I don’t know whether we will be able to grow at the same pace as we did in 2010, because 2009 was a period of slowdown, wherein the luxury car segment did not grow much. But now with X1 in our portfolio coupled with the growth in dealership network, we do hope for double digit growth in 2011 as well.

B&E: A few days back, you turned down a deal that could have seen 101 BMW cars being purchased in Aurangabad. Some months back, your arch rival Mercedes-Benz signed a similar deal successfully. So, why did you decline the offer?
AS: We have set up dealerships across the country to treat customers as individuals. If customers group-up and start demanding a 25% discount on the retail price, no individual in the country would thereon buy BMW cars without a 25% discount. It would have been the first step of brand erosion at the cost of a 101 units increase in sales volume. Though I would have loved to sell 101 more cars, post a long discussion on this in New Delhi, we finally decided that it was not worth jeopardising the BMW brand (and dealers’ profitability) for the sake of volumes.

Pawan Chabra           

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