BMW starts local engine assembling, CKD car prices unaffected

According to the latest updates in the Indian automobile market, the Indian subsidiary of German car maker BMW stated that engine assembling of BMW 3 Series and BMW 5 Series sedans and sports utility vehicle BMW X1 has been started at its Chennai plant from April. This step was taken so as to avoid extra 30 percent customs duty which is being applied on them following the new rules implicated on completely knocked down units in the Budget.

BMW India President Andreas Schaaf said that their existing completely knocked down (CKD) operations are complying with the new guidelines. And since they are paying only 10 percent duty, there would be no increment in the price of cars.

It should be noted that in 2011-12 Budget session, the custom duty on already assembled engines, transmissions and gearboxes was increased to 30 percent in lieu of 10 percent earlier. However, other car parts are still holding the figure of 10 percent custom duty.He also said that since 50 percent of engine assembly is done is India so it is considered as locally produced. And as the volume will increase, company will start manufacturing complete vehicle in India itself.

According the reports BMW is currently assembling BMW 3 Series and BMW 5 Series cars and the SUV BMW X1 in Chennai, India. Right now the ex-showroom price of BMW 3 Series and BMW 5 Series cars in Delhi begins at Rs 24.4 lakh and Rs 37.6 lakh, respectively, while the price of BMW X1 starts at Rs 22.4 lakh.As per reliable sources, Schaaf expressed discontent on the whole issue of increase in custom duty by government as latter didn’t consult the industry before changing the rules.

Furthermore, Society of Indian Automobile Manufacturers (SIAM) is currently in talks with government regarding reduction of the duty or providing manufacturers extra time manage in-house production of parts before the new duty is imposed.Industrial sources stated that earlier this week the BMW’s main competitor Mercedes-Benz India announced the assembling of engines and transmissions of Mercedes C and Mercedes E Class sedans at its Chakan factory