BMW has increased component localisation for its vehicles assembled at its Chennai plant in Tamil Nadu (India) to 50%, reports Reuters. As part of this move, the German automaker is co-operating with suppliers including Force Motors, Tenneco Automotive India and Lear India. The company has increased the number of local suppliers to eight this year from two. Axles, door panels, wiring harnesses, exhaust systems, air conditioning and cooling modules, and seats are among the parts that are being procured locally. "We have been focusing on long term sustainable profitable growth in India. As we have a strong portfolio of locally produced cars, it is only appropriate that we increase our localisation levels by sourcing more components locally," BMW Group India president Phillip von Sahr was quoted as saying by the Press Trust of India. "For the past one year we have been working on partnering with the right local vendors, which meet our global standards. From January this year we have increased localisation content to over 50% in vehicles assembled at the plant from only 20% earlier," said Robert Frittrang, managing director of BMW's Chennai plant.
Significance: This move will help the automaker reduce its exposure to high import duties as well as foreign-exchange volatility. Although the move is likely to help the luxury automaker keep its prices stable in India, BMW is unlikely to reduce prices in the immediate future. Earlier this year, the automaker raised the prices of its vehicles in India by 5%. Important among the suppliers to BMW is Force Motors, which announced plans to supply engines and transmissions to the automaker last year . Hero Chassis will supply axles, while Draexlmaier India will provide door panels and wiring harnesses.
