Chennai close to pocketing another BMW center

CHENNAI: German car major BMW is busy finalizing plans to establish an international procurement center in India, and the honor will most likely go to Chennai. It may be mentioned here that close to a year-and-a-half back, the company had announced the setting up of its luxury car assembly facility in the same city.

The plant, set up at an initial investment of 20 million euros for producing BMW 3 and 5 series, is expected to be commissioned next month. For the international procurement center on the other hand, Chennai continues to top the list of three destinations that have attracted the company—Delhi and Pune being the other two.

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Industry sources close to the Economic Times, which reported the development, however, say that Delhi is already out of the race since it does not have a port facility. “BMW has already struck off Delhi from the list since it does not meet the port criteria. In the three slot options, the company is actively looking at Chennai as the ideal destination, given the port, good quality of supply and infrastructure advantages. Also, 40 percent of the country’s automotive supply is from the southern region. To tap one concentrated location makes more sense,” said the source.

BMW’s other procurement center in Asia is located at Beijing. “The center would help BMW maximize its cost savings. It would not call for a big investment but the spin-offs would be huge. Essentially a coordination junction, the center would cater to the needs of several vendors, which would simply boost component business. It would act as a sorting, inspection and validation point that would call for employment of about 30 people,” the source further added.

The proposed procurement center of BMW in Chennai will enable the company, much like Visteon and Ford, to source components for its global operations. Land availability appears to be the only hurdle now, but Pune seems to have fallen back as well, said sources. BMW is likely to finalize the location by the end of the week.