BMW said that its decision to add the Mini to the assembly line at Chennai was part of its “production follows the market” strategy where burgeoning interest dictates local assembly. The company sold just more than 300 vehicles there between March and December last year.
Even though production volumes will be small, the move is expected to save the company costly import fees on finished vehicles. India’s Ministry of Finance brought in new tariffs on the import of finished vehicles this month. From the beginning of April, excise duty on passenger cars with a value more than $40,000 rose from 75% to 100%.
India’s finance minister, P Chidambaram, is reported as stating that affluent customers in India “will not mind paying a little more”.
The duty on SUVs is being increased to 30%.
BMW said that India has become a significant market since it began operating its own sales company there in 2007. At the beginning of last year it opened its first five showrooms for Minis in Delhi, Mumbai, Hyderabad and Bangalore, making India the 100th market in the global Mini sales network.
“Mini is the first premium manufacturer to be represented in the locally ultra-important small car segment, and is expecting the Indian car market as a whole to experience high growth rates over the medium and long term,” said the company in a statement.
Mini production will run in schedule with BMW 3 and 5 Series, as well as BMW X1 and X3 models.
BMW’s facility has a production area covering around 13,000 square metres and is located in the Mahindra World City business zone in the southwest of India, roughly 40km northwest of Chennai.
BMW is spending £750m ($1.1 billion) in expanding production at its UK sites in Oxford, Swindon and Hams Hall and has also signed a contract with VDL NedCar regarding the production of Minis at the former Mitsubishi plant in the Netherlands from 2014 on.
Contract manufacturer Magna Steyr also makes the Mini Countryman in Austria.
BMW delivered a record 301,500 Mini vehicles to customers worldwide in 2012, with markets on the American and Asian continents making a particularly strong contribution to this 5.8% increase in sales over the previous year.