German luxury car maker BMW on Tuesday launched its financing arm in India with an investment of $50 million (about Rs 230 crore) to serve the credit needs of retail customers, fleet owners and dealers.
BMW received Non Banking Financial Company (NBFC) status for its financing arm -- BMW Financial Services in India -- a wholly-owned subsidiary of the BMW Group.
It will be headquartered at Gurgaon. "India has positioned itself as one of the fastest growing economy. We are the first foreign and premium automobile company to open financing arm in India. We will have first mover's advantage," BMW Group Financial Services Chief Executive Officer Georg Bauer said.
The company has put in an initial investment of $50 million for this year in this venture, he added. "By next year, we expect this amount to be exhausted," Bauer said without giving details on how much more capital the company plans to bring into the country. BMW India Financial Services Managing Director and CEO Sanjiv Shah said that the new business will provide services in three areas -- retail finance, commercial (dealer) finance and insurance solutions by tying up with Bajaj Allianz.
He said that the financing arm will offer its solutions to customers opting to buy other manufacturers' cars also. "We will finance both new and pre-owned cars at 8.75 per cent interest rates.
However, there is a possibility to offer some models at a rate lower than this," Shah said. He said that the company's current dealerships will be the touch points for the financial services business.
BMW India is planning to enhance its customer reach to 22 dealers by 2011 from 18 outlets at present. BMW Financial Services was established in 1993 and it has subsidiaries in 31 countries, besides presence in more than 60 nations across the globe.
Last month BMW India said that it had hiked production capacity at its Chennai facility to 5,400 units per annum and would make a fresh investment of Rs 70 crore (Rs 700 million) by 2012.
It has so far invested Rs 110 crore (Rs 1.1 billion) at the plant. The company had also announced to introduce its pre-owned car business -- BMW Premium Selection -- by the end of 2010.
In 2009, BMW India sold 3,619 units and toppled its compatriot Mercedes-Benz to become the numero uno luxury car maker of the country.
