Petrol Stop - Can't afford a BMW? No worries, buy a second-hand

Can't afford a BMW? No worries, buy a second-hand

Wednesday, 13 January 2010

14 Jan 2010;economictimes.indiatimes.com:Gouri Agtey Athale:PUNE: Competition in the luxury car market is spreading into the used-car segment too. German carmaker BMW has got off the mark by announcing it will roll out BMW Premium Select, its organised business in this segment, by the middle of the year. Since finance is crucial for this business, the luxury car maker has also applied for a licence for an NBFC (non banking finance company). This way, it supports the business. BMW India, which is the leading luxury car brand with a 40% market share, sold close to 3,619 units last year. BMW will thus have separate business units for each activity, from selling cars, fiinancing the buyer and the dealer, to financing used BMW cars. Peter Kronschnabl, managing director, BMW India, said, "This will open up a totally new group who cannot afford a new BMW but want one." He added, “this business is so new in India that there are no estimates on the demand for such cars.” Mercedes Benz, market leader in the Indian luxury car segment for over a decade who recently lost its premier position, is also expected to jump into the fray. Sources at Mercedes dealerships said the OEM is expected to start this as a separate business unit in another six-eight months. The Mumbai and Hyderabad dealerships have been offering this service off their own bat but have not been able to grow it due to a lack of financial muscle. The quantum of funds required by a dealership to finance used cars in this segment is around Rs. 5-6 crore. One dealer has been spending around Rs. 1-2 crore on his own to finance this segment. He is waiting for the OEM to enter the business. Ayaaz Fazulbhoy, director, Fazulbhoy Motors, a Mumbai-based used car dealership, pointed out, “The entry of car companies will organise this business since OEMs can offer warranties etc. It will cause a shakeout and we expect more luxury car brands to enter this segment.” BMW Premium Select business will start by the middle of this year, initially at the Gurgaon dealership, watch it and then roll it out selectively, Mr Kronschnabl, said. Some of Mercedes Benz’ and Audi dealers have been doing this informally, the former simply calling it the Mercedes pre-owned car business. Benoit Tiers, managing director, Audi India, had stated a few months ago that they will also start the pre-owned car business.