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December 29, 1999

BUDGET 1999-2000

Britain's Rover eyes multi-utility vehicles segment in India

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Despite a failed run in India with the Bangalore-based Sipani Automobiles, Britain's Rover Car Group is contemplating a re-entry with its range of cars and four-wheel drives and multi-utility vehicles or 4WDs and MUVs, a top company executive said in Paris.

Feasibility of the re-entry is being assessed by BMW Ag, the present owner of Rover brand.

Felix Herrnberger, president, BMW Asia Private Limited, said that India has a huge market for 4WDs and MUVs and the company hopes to service this demand through its Rover range of products.

The previous experience of Rover in India would not act as a dampener, he added.

''Just because one particular way does not work does not mean end of the road,'' he said. However, no time-frame has been set for the venture, he said, adding that all investments into India would flow in only if the investment restrictions are relaxed.

''If conditions allow us, we can go ahead with assembling these vehicles in India. Landrover could be a perfect fit in the 4WD segment and Rover cars in the comfort segment. We are willing to invest and set up an assembly unit in India... but all that would happen if the government relaxes its restrictions on minimum investment levels.''

Rover's Indian partner, sick Sipani, keen on small segment MUV

Meanwhile, the Sipani group, which has come under the purview of the Board for Industrial and Financial Reconstruction in India, is awaiting a rehabilitation programme from the agency to salvage its troubled bottomlines.

Sipani has a history of failures in the automobile arena starting with the country's first three-wheeler car Baadal and the three-door model Dolphin. Even its much-touted tie-up with Rover Car group to produce the Montego range of cars failed to be a good draw in the market, which saw the company's prospects crashing.

The failures notwithstanding, R K Sipani, owner of Sipani Automobiles, still seems to be willing to take a shot at the auto market in India. Even as the company had eroded its net worth, Sipani planned to introduce another vehicle for the Indian market, this time a small segment multi-utility vehicle called Arjun. This eight- to 12-seater was expected to be powered by a 500cc diesel engine by Greaves.

Besides the five car models, the Sipani group has also been producing a tractor at Auto Tractors Limited, a company Sipani took over in 1991.

Sipani Automobiles, which was reeling under accumulated losses of Rs 70.9 million for the 15-month period ended March 31, 1997, had expressed hope in its then annual report that the future of the new vehicle will be bright.

The company manufactured and sold 51 Rover Montego luxury cars during the 15-month period ended March 1997 as against 236 units in the previous year.

Rover has been a prominent player in the area of rugged and luxurious off-road vehicles for the past 50 years. The vehicle is currently sold in over 100 countries.

BMW mulls launch of safety 'scooter' in India

Meanwhile, BMW Ag is also exploring the feasibility of producing its new concept scooter -- the C1 -- in India. ''The vehicle is being introduced only in countries where it has been permitted to be driven without a helmet,'' Herrnberger added.

The C1 is a scooter with a safety cell and so can be driven without a helmet. German and Spanish authorities have already given the go-ahead to this concept and the company is in talks with other governments for similar permissions. The vehicle would be introduced in Europe in Spring 2000.

BMW, it may be recalled, had earlier planned to set up a joint venture in India with the Brijmohan Lall Munjal-run Hero Group in India for its 3-series and 5-series cars. But the government regulation demanding a minimum $ 50 million investment had forced it to abort the plans. BMW had been seeking a relaxation in the limit to allow the German major to invest $ 35 million instead.

The company, Herrnberger said, is willing to reconsider its aborted plan to set up an assembly unit in India, provided the relaxations are offered. However, the company has not decided whether to make this re-entry in association with the Hero Group.

BMW not to revive planned JV with Hero, seeks to set up assembly base, service grid

However, it has decided not to revive its long buried venture with the Hero Group for producing lifestyle motorcycles. ''The Hero chapter is closed for us and bikes are completely out of our India plans. But India still remains a long term goal for BMW,'' Herrnberger said.

''What we had introduced in India was the lowest-end model from our stables but such lifestyle bikes do not have a market in India,'' he said.

The BMW bike was initially introduced with a price tag of Rs 450,000 but abysmally low sales figures forced the company to trim the tag to Rs 180,000. However, this also failed to prop up sales and the company decided to pull down curtains on the venture.

Even as efforts would be renewed to seek approval for an assembly base in India, BMW would work towards establishing a service network in the country. ''We already have two exclusive importers for our cars -- Kashyap Motors in Delhi and Navneet Motors in Bombay. We are looking at putting in place some more exclusive importers and service outlets well before setting up shop in India,'' Herrnberger said.

BMW is currently selling close to 100 cars per annum in India as completely built unit imports. ''If allowed, we are looking at importing and assembling completely knocked down kits to start with. There is great potential for our well-known marquee and we want to tap it.''

Although its sales in entire Asia has dropped over the past two years, the company is not planning to reduce presence in the region. ''In fact, we are renewing our efforts to push up sales in the region and expect to come back to previous levels over the next two years... there are a lot of hurdles to overcome.''



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