In Conversation with Philipp von Sahr, President, BMW Group India

Philipp von Sahr has been the President at BMW Group India since October 2012. An alumni of the University of Munich with a Master of Business Administration, he started his career at BMW AG, Munich in 1979 at the age of 21. Between 1981 and 1986 he interned at BMW Group in South Africa, UK and USA, and was back at BMW AG, Munich in 1987, in the Sales & Net Domestic Planning function. He then moved to Business Planning in 1991 and subsequently joined the BMW Branch Offenbach as Director in 1997. In 2000, he moved to BMW Branch Frankfurt as General Sales Manager and later to BMW Group Norway as Director in 2002. He was Head of BMW Branch Frankfurt in 2004 and Head of Sales at BMW Group Germany in 2008. Prior to heading India operations, he was the President of BMW Group Belux (Belgium and Luxemburg) since 2009.

The BMW Group in India has its sight set firmly on the premium sector of the automobile market with its three brands: BMW, MINI and Rolls-Royce. Raghav Sarma spoke to Philipp von Sahr about the journey of the group in India so far, the challenges of marketing luxury brands in a value driven market, the changing dynamics of the market and the media, and plans for year 2015 and beyond.

February 2012/ In conversation with Raghav Sarma:

Raghav Sarma: BMW launched in India in 2006. In this 8 year brand journey, what have been the significant highs and lows?

Philipp von Sahr: BMW is a very successful luxury brand in India. To meet the expectations of the luxury consumer here, we offer an enhanced experience through superior quality products, luxurious dealerships, outstanding customer service as well as exceptional and engaging events for our clientele in India.

Today, we have the largest, youngest and the most attractive product portfolio in the luxury car market in India. The BMW DNA in all our cars is synonymous with ‘Sheer Driving Pleasure’ and the power of technology and innovation. We want to be the leading luxury car company with ‘Delighted Customers’, ‘Strong Partners’ and most important ‘Sustainable Leadership’. We offer our customers exclusively authentic premium luxury products, which are differentiated by their emotional appeal, uncompromising engineering, innovative technology and quality.

Raghav Sarma: Currently BMW is at No.3 in the pecking order in India in the luxury auto segment. What are the plans for India in 2015 and what would be your strategy to drive back BMW to the top slot again?

Philipp von Sahr: We are well positioned in the Indian market with the most desirable product portfolio across each price segment in the luxury car market. In order to achieve growth, we will resolutely expand our product range and cover all opportunities in the luxury car segment which are relevant for us.

BMW has strengthened the momentum of its brand strategy by spearheading ‘Sheer Driving Pleasure’ with powerful letters like ‘M’, ‘X’ and ‘i’. These three letters will further propel BMW as the most aspirational luxury automotive brand in India.

In 2014, we have launched 10 products in the Indian market – The all-new BMW 3 Series Gran Turismo, the all-new BMW M6 Gran Coupe, the all-new BMW X5, the all-new BMW ActiveHybrid 7, the new BMW X3, the new BMW M5, the all-new BMW M3, the all-new BMW M4, the new MINI 3-door and the new MINI 5-door.

The new launches of 2014 have received tremendous response across all our dealerships in India. The customers are very excited about the latest offerings in the BMW portfolio. Most of these offerings are in the above INR 1.0 Crore category and we are confident that they will establish a new benchmark in the Indian luxury car segment.

BMW M stands for a unique philosophy of driving pleasure – high performance, sophisticated sporting flair and aesthetics. ‘M’ defines the supremacy of motorsports. The all-new BMW M6 Gran Coupe, the new BMW M5 Sedan, the all-new M3 Sedan and the all-new BMW M4 Coupe have propelled the power of ‘M’ on the Indian roads.

The Sports Activity Vehicle segment was created by BMW and ‘X’ vehicles are known for superior dynamic performance on the road and outstanding traction on rough terrain. The new BMW X3 and the all-new BMW X5 guaranteed a new driving experience in the premium SAV segment.

2015 will mark the introduction of BMW i brand in India. BMW is ready to get the future of mobility to the Indian market in shape of the BMW i8, a plug-in hybrid drive with the heart of a sports car and a mind of a responsible citizen. As a prequel to this, BMW India has recently launched the all-new BMW 7 Series Active Hybrid in India.

Raghav Sarma: While Mercedes Benz has been the pioneer in the Indian luxury auto market and has its fair share of loyal Indian customers, Audi has come in from behind with an extremely aggressive marketing approach to race to the top. Could you share BMWʼs competitive strategy and are you happy with the current position the brand is in?

Philipp von Sahr: We witnessed an unprecedented price war from competition for market share of the Indian luxury car segment. But, we have made our price decisions with due care and consideration. They will pay off in the long run. They must lead to a win-win situation – both profitability and growth. We want to increase our sales volume, but not at any price. We don’t want to be No.1 in discounts. Unlike our competition, we will not venture into the Indian luxury market with discounted cars.

We believe ‘premium’ is beyond mainstream and sets the pace with the right ideas, fortitude and determination. We want to achieve further growth with our brand and strengthen the distinctiveness of our brand. Drivers of premium cars want to differentiate themselves. We intend to meet all those needs. Focus on customer satisfaction will prove to be the key differentiating factor between us and the competition now and in future.

Raghav Sarma: As a luxury brand operating in a value driven, emerging & aspirational market, how different is India compared to European markets like Norway & Belgium where you have led operations earlier.

Philipp von Sahr: India is a country which is witnessing dynamic growth. Luxury is a constantly evolving and subjective concept and is not a new experience to India. India has an extensive history and tradition of opulence and wealth.

The experienced luxury customers like the royals, industrialists, celebrities and the traditionally rich families have always embraced the finesse of luxury brands and continue to do so. At the same time, the aspiration of thousands of young entrepreneurs beats in the centre of emerging India and has fueled the luxury market in the country. They are achievers predominantly from Tier 1 and Tier 2 cities who have a dynamic attitude and are technology savvy. With the rise in disposable income, they are not hesitant to spend on luxury products and services. Luxury for them is an indulgence and they want to associate with top brands to make a statement or simply to reward themselves for their achievements. They are new to the world of luxury and have created a strong consumer base and opened an untapped market potential for luxury goods.

Not only have the ‘nouveau riche’ started opening up to luxury, but there has been a tremendous growth within the existing patrons or the traditionally wealthy families of India. A car is no longer treated as a ‘necessity’ but as a lifestyle choice. The number of cars in a family sometimes is higher than the number of family members themselves.

A decade back, owning a luxury car was seen as a symbol of ultimate success. It remains so even today but is no longer seen as a reward at the end of a highly successful career. In fact, it now denotes ‘the starting steps to success’. The young generation is bright, enterprising and hard-working. These ‘go-getters’ do not want to wait to experience joy. They want to live in the present and dream big for the future. Increasing awareness about global brands and door-step availability has made it easier to experience luxury and so lifestyle choices are becoming increasingly ambitious.

The Indian luxury consumers characterized by elitism and heritage are very demanding as compared to their European counterparts. The ever evolving Indian luxury consumers today are well-travelled, sophisticated, discerning and have very high expectations when it comes to luxury purchase.

Raghav Sarma: How would you respond to the Indian governmentʼs ʻMake in Indiaʼ initiative? Would the company be looking at any significant investments to consolidate its presence further in India?

Philipp von Sahr: The wide range of BMW activities in India include a manufacturing plant in Chennai, a parts warehouse in Mumbai and development of a dealer organization across major metropolitan centers of the country. The BMW Plant Chennai started operations on 29 March 2007. Till date, we have invested over INR 3.9 billion (€ 51.8 million) in it and locally produce the BMW 1 Series, the BMW 3 Series, the BMW 3 Series Gran Turismo, the BMW 5 Series, the BMW 7 Series, the BMW X1, the BMW X3 and the BMW X5.

Since 2007, we have strengthened our commitment to the Indian market and continuously increased the number of locally produced car models. With a strong portfolio of locally produced cars, it is now the appropriate time for us to partner with major Indian auto component suppliers who will play a significant role in the future strategy of BMW Group in India. With the addition of these partnerships, the level of localization at BMW Plant Chennai will increase to approximately 50 percent. We are confident that through our partnership with Indian auto component suppliers, we will set even higher benchmarks not only in quality standards but also in cost optimization and value addition.

Raghav Sarma: Which segment according to you, would be the growth driver for the luxury auto market in the coming years?

Philipp von Sahr: Being a price sensitive market, the country has seen a huge rise in the entry-level or the compact luxury car market. This segment gives the opportunity to the customers to enter the world of a luxury brand at an entry-level price. Customers looking to experience luxury at an exceptional value are also the core target audience of pre-owned luxury car market.

At the same time, there are customers who want to own only the best-in-class. For these customers flagship cars, performance cars, coupés and convertibles are in the offering. These customers want to be further differentiated even within the luxury circle.

The Indian luxury market is still at a nascent stage, but it has immense potential with rising purchasing power, growing aspiration for luxury brands and evolving lifestyles. Considering that India has a population of over one billion, there is more potential for growth. We foresee untapped potential from Tier 1 and Tier 2 cities.

Raghav Sarma: The M3 and M4, both performance oriented sports cars, were launched in India recently, whereas globally BMW has said that the heydays of sports car market is over. Given our relatively poor infrastructure, do you really see this as a significant segment in India?

Philipp von Sahr: BMW is a sporty brand. And M is still the most powerful letter in the world. BMW M stands for a unique philosophy of driving pleasure, high performance, sophisticated sporting flair & aesthetics. M defines the supremacy of motor sports and BMW M has played an important role in shaping the BMW brand. For more than four decades, BMW M has stood for emotional, high-performance sports cars and numerous success stories in motor sport.

For M cars, we also have another development goal – one that becomes apparent after the racetrack is closed for the evening: The M3 and M4 are totally suitable for everyday driving. You can drive an M3 or M4 to the track, spend a thrilling day on the circuit and then enjoy a relaxing drive home. We have recently launched the all-new BMW M6 Gran Coupe, the new BMW M5, the all-new BMW M3 and the all-new BMW M4 in India. M cars are designed for customers who want the best of both worlds.

Raghav Sarma: BMW has taken a step into the future with the i3 and i8. When can we expect to see them on Indian roads?

Philipp von Sahr: The highlight of this year will be the introduction of BMW i8 in the Indian market. BMW i presents a ground-breaking concept with visionary electric vehicles and mobility services, creating a new understanding of luxury that is strongly defined by sustainability. The all-new BMW i8 is all set to be launched in Mumbai on 18 February 2015.

Raghav Sarma: Mini has a perfect line up, almost made to measure for India. What has held such an iconic brand back from achieving the same success here, as it has globally?

Philipp von Sahr: By launching the MINI thirteen years ago, the BMW Group created the world’s first premium small car brand and ever since we have worked continuously on keeping it the most exciting automotive brand. With MINI our approach was: ‘From the Original to the Original.’

India is the 100th country that MINI made its home. We launched the MINI family in India at the Auto Expo 2012 with the MINI Hatch, the MINI Convertible and the MINI Countryman. Since then, MINI India has established four exclusive outlets – Bird Automotive (Delhi), Infinity Cars (Mumbai), Navnit Motors (Bangalore) and KUN Exclusive (Hyderabad).

The  success of MINI has far-surpassed all expectations; with modern interpretations of classic MINI design features, ‘go-kart’ handling, elegantly styled interior and a unique brand image making the new MINI a hugely popular one-of-a-kind vehicle. With MINI, it is possible to build upon its heritage, while at the same time, the brand is so youthful and contemporary; we can experiment with completely new ideas.

MINI is more than just a car. It is a personality on wheels. A fashion statement. And a way of life. No other brand exhibits the attributes and essence of a modern urban lifestyle like MINI and there is no doubt that it is one of the world’s most emotional auto brands. People love MINI because it is unbeatable urban ‘chic’: a brand which knows how to combine authenticity with novelty, and style with excitement. MINI is loved for its extroverted and likeable character. MINI has this little ‘unique personality’ as we do. This is the true, unrivalled MINI USP.

MINI’s innovative profile has enabled the brand to win over a trend-conscious and quality-oriented target group and customers are not confined to a certain age group or background. They are successful individuals who believe in living life to the fullest. They look to MINI for its cutting-edge spirit and fresh, fashionable styling, performance and driving fun.

Today, MINI is a clever product for urban mobility. We have achieved this through creating outstanding product substance – respecting tradition, and at the same time meeting the demands of today’s customers. MINI shows maximum creativity in compact dimensions and has taught us that small cars can be very personal and individual. It is a logical choice for those who want a fuel-efficient and eco-friendly vehicle which is a lot of fun to drive. All this makes it a premium product and sets it apart from the competition.

Raghav Sarma: What according to you is the next big game changing innovation that the automobile industry should look forward to? Going forward, are there any significant global investments in green/ future technology or breakthrough R&D at BMW, that you would like to speak about?

Philipp von Sahr: For 98 years now, BMW has asserted its position in the automotive industry. Ours is a unique history; one that has defined us, and made us what we are today: a respected, global company. Over these years, we have shaped progress, inspired our customers and charted our own course. That is something to be proud of. We build upon that experience, but our perspective is geared towards the future.

Because one thing is clear: The world – our world – is changing. Everything is becoming more complex and more global; our lives are growing faster, more mobile, more connected. Perpetual change is the new constant. As a company, we have to constantly think about what the future will look like and how we can work today to make it better.

Raghav Sarma: Digital & social media has emerged as a significant challenger to traditional brand building & PR. As a brand, how do you respond to this emerging trend?

Philipp von Sahr: As the world’s leading luxury car brand, BMW focuses on creating connected consumer experiences to drive brand engagement and the digital medium definitely helps us achieve this effectively. To market an aspirational car brand like BMW in a country as diverse as India, it is critical to create experiences and constantly stay in touch with consumers. As a marketing tool, therefore, we have focused on harnessing the power of digital media to create passionate brand engagement and cultivate millions as fans.

From iPad apps with car configurators to driving engagement on social networks, BMW has been leading on the digital front in India. The BMW India Facebook page with close to 3 million fans is just an example of how successfully we have been able to interact with an ever growing fan base and hence spread Joy in the virtual world.

Raghav Sarma: Social media is a double edged sword. While it cannot be ignored to stimulate positive brand engagement, there have been instances of reputations being tarnished on Twitter and other forums due to poor service, lack of safety and general customer dissatisfaction. Your views on how BMW has been dealing with it?

Philipp von Sahr: The most impressive thing about digital media is its ability to drive response. There is a constant dialogue waiting to happen between the brand and the consumer. To give you an example, for the launch of the all new BMW 3 Series, we started with a pre-launch campaign two weeks prior to the launch. This was meant to pre-inform customers and prospects about the new BMW 3 series. The campaign was supported by a website, which spoke about why the previous generations of the cars were so special and hence highlighted the successful history of the brand. We then left it open to consumers. If they were interested, they could leave contact details and receive ongoing information. Similarly, through the three phases of our campaign, we were able to receive instant feedback and response to our communication instantly.

Digital is a young and dynamic medium of communication. India is one of the youngest nations with over 64 per cent population in the age group of 15-59 years. This medium gives you a platform to target relevant customers and produces high visibility and brand recall through word of mouth. Earlier, customers believed in going to the showrooms, scrutinizing brochures and test-driving the car of their choice. Today customers are more networked, tech-savvy, digitally engaged, and hence more informed. Given the growing prevalence of technology in the age group, digital and social media will surely play a critical role in building a brand connect with them from an early stage.

Interestingly, 80% of the fans associated with BMW India on Facebook belong to the age group of 18-34, highlighting their deep rooted affinity towards the BMW brand. Our digital strategy therefore is always geared to stay relevant while keeping the audience engaged to experience the sheer driving pleasure.

Raghav Sarma: You are an auto enthusiast yourself. What will one find in your garage?

Philipp von Sahr: The BMW 7 Series represents the best from BMW and is really special to me. It is the most dynamic luxury limousine and provides unmatched levels of opulence, comfort, safety and technology. In Munich, I drive my BMW 7 Series regularly. This is one vehicle where you enjoy being a passenger as much as a driver.

The other car I like to drive is the new MINI. Injecting everyday versatility with indisputable MINI attitude, the new MINI 5-door proves hands down that five doors can be just as much fun as three. Mixing trademark MINI looks and handling with easy access and extra legroom, the MINI 5-door gives you the comfort of a saloon car without giving up any of the classic MINI excitement.

Raghav Sarma: What passions do you pursue after hours?

Philipp von Sahr: In my free time, I like to travel and explore new destinations.

Raghav Sarma: And a few words on how BMW will continue to remain relevant to the next generation of customers?

Philipp von Sahr: What will customers expect of a mobility company ten or twenty years from now? That’s what we always ask ourselves, because the aspirations and needs of our present and future customers always come first. The BMW Group looks towards the future with confidence. This is what sets the BMW Group apart from the competition.