The Tata Nano was supposed to replace scooters in the Indian market, but a generation of Indian males gained the freedom of mobility on small displacement two wheelers.
So the demand for bikes is still there, even when cars are within financial reach. Harley-Davidson and Ducati have decent presences in India and BMW could add to their reach with a purported tie-up with Indian manufacturer TVS.
The bulk of bike sales in India are under 250 cc. BMW’s two scooters are 650cc. Husqvarna Motorcycles, a BMW subsidiary, does build some 125cc bikes – which, along with mopeds, is the sweet spot for the Indian market. On the surface it doesn’t sound like a good fit for BMW, but TVS gets access to BMW’s expertise in higher displacement, premium bikes.
But BMW does gain one critical item if they partner with TVS, a manufacturing partner that can help bring BMW into one of the two largest motorcycle markets on the planet. In India you need either a partner or a manufacturing presence.
The tariffs on imported vehicles in many emerging markets forces manufacturers who want to participate into assembling cars in the market. These aren’t full service manufacturing facilities, like Munich or Leipzig for example, but rather ‘final assembly’ facilities.
BMW has a few such facilities scattered around the world. In India they operate out of what is know as the Indian ‘Detroit’, Chennai. At this facility BMW assembles completely knocked down car kits and also assembles engines and transmissions (tariff changes necessitated at least a 50 percent assembly ratio for major components).
Often manufacturers will partner with local corporations to do the final assembly. An example of this is the current final assembly facility in Kaliningrad, Kaliningrad Oblast, Russia. Kalingrad used to be Koenigsberg, East Prussia, but at the end of WW II it was absorbed into Russia (with almost the entire remaining German population evacuated/removed). BMW partners with Avtotor to do final assembly of BMWs destined for the Russian markets. While Kalinigrad is in Russia, it’s closer to Munich than Moscow. And that helps BMW.
But, when as a market heats up, BMW can start full production. And BMW has plans to do just that at Kaliningrad. As Indian demand heats up, look for Chennai to do more total production. After all, China started out similarly and the Chinese facility in Shenyang http://www.bmw-brilliance.cn/
The Beauty of BMW’s RTM
The Truth About Cars’ Bertel Schmitt authored a really good series of articles on the building of the Lexus LFA. They can be found here. They are worth the time and effort to read. Well written.
But one of the interesting pieces in the article is the description of how long Toyota’s RTM has to remain in the mold before being pulled. And that’s what makes BMW’s RTM process so incredible. They have reduced the cycle times to pull parts to minutes, not hours. And that has to be a big reason we saw the announcement of BMW and Toyota building a partnership.