bmw's portfolio diversification

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Introduction of Luxury Buses in India Group 5 Atman, Siddharth, Milin, Mona, Prasan

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In this case, we have looked at the possibility of BMW's Portfolio Diversification with its possible entry in the Indian market with Luxury buses

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Page 1: BMW's Portfolio Diversification

Introduction of Luxury Buses in

India

Group 5Atman, Siddharth, Milin,

Mona, Prasan

Page 2: BMW's Portfolio Diversification

The Team

2

Mona Sharma Prasan Arora

Milin ParekhAtman Shah

Siddharth R

Page 3: BMW's Portfolio Diversification

BMW Background

BMW stands for Bavarian Motor Works is a German automobile, motorcycle and engine manufacturing company

Founded in 1917 and headquartered in Munich, Bavaria, Germany

Initially, BMW started off manufacturing aircraft engines and subsequently after WWI moved onto automobiles

Accolades

In June 2012, BMW was ranked the #1 most reputable company in the world by Forbes

The BMW Group is ranked #61 in the list of Forbes Fortune 100 Companies (2012)

Sources: http://www.forbes.com, http://www.bmw.com 3

Page 4: BMW's Portfolio Diversification

4

BMW’s Portfolio

Source: http://www.bmw.com

Page 5: BMW's Portfolio Diversification

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Strategy & Product PositioningSTRATEGY

BMW should diversify its portfolio by opting for a line extension

Create a new brand in the luxury bus market to take advantage of a growing market

Leverage its iconic brand identity

ZERO Cannibilization – New Product

Strong promotion should ensure an improved brand image

Page 6: BMW's Portfolio Diversification

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Strategy & Product PositioningPOSITIONING

Market: Initially focus on India, and later expand to Asia (China, Vietnam, Malaysia, Indonesia)

Product Competitors: Volvo, Mercedes Benz, Tata

Service Competitors: Indian Railways

Pricing: On par with the likes of Volvo and Mercedes Benz

Customer Interface: Bus operators, Government Corporations

End Consumer: Urban population having medium levels of disposable income

Network: Urban area connectivity

Page 7: BMW's Portfolio Diversification

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India’s Transport SystemAir, Rail & Road

With respect to the average middle class Indian

Airways – Time saving but extremely expensive

Railways – Cheap, but erratic and extremely crowded

Roadways – Reasonably priced but lack of options

The Golden Quadrilateral and the NSEW Corridor and the emergence of the luxury bus market has changed the landscape

India has the 2nd largest road network in the world (4,320,000kms)

India planned to spend approximately US$500 Billion according to the 11th Five Year Plan to modernize its highway network

Source: http://www.nhai.org, http://web.worldbank.org, KPMG Report 2011

Page 8: BMW's Portfolio Diversification

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Luxury Bus Market in IndiaCurrently 41% Indians use buses as their primary mode of transport (NHAI Report 2010)

The bus penetration is amongst the lowest in India at 0.75 bus for every 1000 people (NHAI Report 2010)

India - 2nd largest luxury bus market, after China selling over 46,000 buses in 2011

The luxury bus segment, is expected to grow by 20 per cent, year-on-year

With increasing urbanization, the demand for luxury buses is growing at a rapid rate

Hartmut Schick (Global Head, Daimler Buses) expects it to reach 80,000 units by 2020

Source: http://www.hindustantimes.com/News-Feed/Auto/Indian-bus-market-will-almost-double-by-2020-Daimler

Page 9: BMW's Portfolio Diversification

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BMW’s footprint in India#1 brand in the premier car segment in India

Market share rose up from 9% in 2006 to 42% in 2011

3 Series, X1 and 5 Series are CKDs while the rest are CBUs

Assembly plant in Chennai

Will start sourcing components from Indian vendors by 2013

Confidence in Quality – BMW Service Inclusive (BSI)

Extensive dealer network

Promotions: Golf tournaments, wine tasting events and fashion shows

Source: http://www.team-bhp.com/forum/commercial-vehicles-india/117459-detailed-look-tatas-divo-starbus-ultra-buses

Page 10: BMW's Portfolio Diversification

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BMW’s Competitors in India

Volvo is the current market leader with 76% market share

Volvo entered India in 2001, & waited for the industry to mature

Volvo manufactures its buses in India at their Hoskote plant near Bangalore, with another plant to be started soon

1st mover advantage helped Volvo set regulations such as variable bus lengths, number of seats, etc.

Making India a hub for Asia, heavy localization

Launched Multi-Axle variant in 2010

Source: Business Today - How Volvo changed the way Indians travel

Page 11: BMW's Portfolio Diversification

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BMW’s Competitors in India

Claim to fame: Invented the bus

Mercedes-Benz has 13 per cent market share globally in the luxury bus market

Manufacturers buses in India through a local JV partner in Sutlej Motors

Priced at (Multi Axle) – Rs. 9 Million (Ex New Delhi)

Source: http://www.business-standard.com/india/news/mercedes-plans-to-enter-city-bus-market-in-india/397023/

Page 12: BMW's Portfolio Diversification

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BMW’s Competitors in India

Launched Tata Divo in India in Dec 2011

Designed by Hispano Carrocera of Spain, a Tata subsidiary

The Divo brand and design is sold all over the world by Hispano

Tata enjoys a phenomenal brand recognition and after sales

Priced at Rs. 7 million (Ex – Mumbai)

No multi-axle option available

Source: http://www.team-bhp.com/forum/commercial-vehicles-india/117459-detailed-look-tatas-divo-starbus-ultra-buses

Page 13: BMW's Portfolio Diversification

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Referenceshttp://www.forbes.com

http://www.bmw.com

http://www.hindustantimes.com/News-Feed/Auto/Indian-bus-market-will-almost-double-by-2015-Daimler

http://www.business-standard.com/india/news/mercedes-plans-to-enter-city-bus-market-in-india/397023/

http://www.nhai.org

http://web.worldbank.org

http://www.business-standard.com/india/news/mercedes-plans-to-enter-city-bus-market-in-india/397023/

Page 14: BMW's Portfolio Diversification

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WHY BMW ?

Despite volatile business conditions, the BMW Group experienced the best year in 2011 selling 1.67 million vehicles in 2011

BMW Group is world’s leading premium manufacturer in terms of sales volume

Manufacture extremely fuel efficient and powerful diesel engines

WHY LUXURY BUSES ?

Rising population in countries like India, China

Rising oil prices

Inefficient government ticketing systems

Improving road conditions

Increasing tourism

Sources: BMW Annual Report 2011 , Group5_Gutfeel