Business Today

Small car for megacities

German auto giant BMW eyes the small-car market with the 'Megacity' hybrid to shore up sales and profits.

Kushan Mitra | Print Edition: May 2, 2010

Desperate times call for desperate measures. German luxury carmaker BMW had a torrid 2009. Despite clocking growth in key markets like China and India, global sales still plummeted 10 per cent to 1.29 million vehicles. With sales and profits nosediving, BMW AG Chairman Norbert Reithofer had to pull a rabbit out of the hat that was not called "China".

And he did. By disclosing that BMW will start making a new frontwheel drive small car from 2014. To put this in perspective, the smallest car BMW makes today, under its own brand, is the 4.3 metre-long 1-series comparable to the Honda City on Indian roads. The new car will be smaller, a size comparable to what is currently sold as large hatchbacks in India.

  • The new "small" BMW will still be a premium, luxury car. But a small one that could easily fit into a cramped parking spot.
  • The BMW small car will have hybrid engine technology and will be designed for urban residents.
  • For the first time, a BMW car will have a "front-wheel" drive. They are much cheaper to make and, on low-power city conditions, possibly better.
And importantly, with the company focussing its energy on alternative energy sources, the new car will have an innovative hybrid engine. BMW is already making significant changes in its engine technologies. While car buyers even today get the company's fuel-efficient and powerful "Efficient Dynamics" system, the company has kickstarted a wide-scale test of an electric vehicle with 600 electric versions of the "Mini" being driven across the world.

The company is now launching both full and partial hybrid technology across several cars in its range. The plans for the small car, then, integrate with the company's larger game plan. The new small car, dubbed the "Megacity Car" by BMW, is just that—a car designed for the needs of the world's megacities. And this is where India fits in.

There is a realisation that on the crowded roads of some large Indian cities, a small, efficient BMW would work a lot better than a gargantuan luxury sedan. Efficient engines coupled with hybrid technologies— even though BMW does not plan to launch such vehicles in India immediately— might also persuade buyers to go green.

Meanwhile, BMW became India's largest luxury car brand in 2009 and plans to hold on to the top spot in 2010. The outgoing BMW India President, Peter Kronschnabl, has set his team a target of 4,000 cars (it sold 3,000 in 2009) this year. With the Indian economy back on its feet, the target may not be a stretch.

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