VW, BMW plan new factories in India

Delhi. Both the Volkswagen Group and BMW are planning to add small-scale factories in India. At VW, Helmuth Schuster and his team have traveled around the Indian subcontinent for months searching for possible locations to build a car factory for the group.

High import tariffs are forcing car manufacturers to set up production in India, where the car market grew 13 percent in the month of September. "Imported standard-size cars are gradually becoming unaffordable for our clientele," said Hans-Michael Huber, head of DaimlerChrysler in India.

Despite intense efforts from various federal states to attract VW, the Wolfsburg, Germany,-based company is dampening expectations. While initially the production of light commercial vehicles was possible, now there is only talk of a small Audi production facility.

BMW has been looking for a partner for complete knockdown kit assembly. "We are looking to enter the market. India is the last blank spot on our map of Asia," says BMW Asia chief Lueder Paysen.

For the time being, BMW is planning an annual production of about 2,000 cars from its 3 and 5 series. "This is not going to be on a grand scale," Paysen said.

BMW founded BMW India with local manufacturer Hero in the 1980s. But the company never started production because back then the government required a minimum investment of $50 million and a "local content" of 80 percent.

Today, BMW is selling approximately 100 import vehicles a year in India.

The VW group already builds the Skoda Octavia in Aurangabad.

Among German manufacturers, DaimlerChrysler is clearly in the lead in India, where it produces the Mercedes-Benz C, E and S class. This year the Stuttgart-based company aims to sell 1,550 cars in India.

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