BMW Raises India Factory Output

PUNE, India — BMW AG’s India unit Thursday said it has raised capacity at its factory for the fourth time in a year to meet rising demand for its luxury sedans and sport-utility vehicles in Asia’s third-largest automobile market.

The latest expansion will take annual capacity at the plant, located in Chennai in Tamil Nadu state, to 11,000 cars and SUVs from 10,000 previously. In December, BMW raised the plant’s capacity by 48% to 8,000 units a year and then in March by 25% to 10,000 units.

This was after the company raised production to 5,400 from 3,000 in September 2010.

The auto maker is lifting capacity so it can assemble its new X3 SUV, which was until recently imported from its German factories.

The expansion comes on the back of record growth in car and SUV sales in India. BMW expects total local sales of premium cars and SUVs to soar to 23,000-24,000 vehicles in 2011, up from 15,000 last year.

Demand for luxury cars and SUVs is booming in India thanks to a series of new model introductions, strong economic growth and rising incomes of the upper middle class.

“India is witnessing dynamic growth,” BMW India President Andreas Schaaf told reporters. “At BMW, production always follows demand, and we added a second shift at our factory to meet demand.”

He said the company will also decide on starting a new vehicle assembly line by December.

“Given the market conditions, we can’t predict what demand will be, and we will take the decision on further capacity increase and a new assembly line by the end of this year.”

The company expects to sell 10,000 vehicles locally in 2011, up 60% from 6,246 vehicles in 2010. From January to the end of July, the company sold 5,364 luxury cars and SUVs.

Mr. Schaaf said the company will invest 700 million rupees ($15.3 million) until December 2012 to ramp up operations. BMW India has so far invested 1.1 billion rupees in its operations, including in the Chennai factory.

BMW Thursday also introduced its new X3 SUV in India, priced between 4.12 million rupees and 4.79 million rupees. It will sell two variants of the X3 with 2.0 liter an 3.0 liter diesel engines.

Mr. Schaaf said also that BMW will decide on introducing its premium hatchback Mini in India next year. “If the decision is a yes, it’ll be introduced two-three years after that.”

BMW currently assembles its 3-series and 5-series luxury sedans and SUV X1 and X3 in India. It imports the 6-series and 7-series, SUV X5, crossover vehicle X6 and sports cars Z4 and M-series.