Pune-based Force Motors will soon manufacture engines and other components for BMW. Force Motors already assembles Mercedes-Benz' engines in India.
After informing the Stock Exchanges that it will set up an engine manufacturing plant in Chengalpet, near Chennai, Force Motors announced the plant will manufacture engines and gearboxes for automobile companies. A report on Autocar Professional, however, confirms that the recipient would be BMW.
BMW's vehicle assembly facility is located inside the Mahindra Research Valley, less than 10 km from Chengalpet where Force Motors' plant is set to come up. Given the distance, it could very well be a just-in-time plant. This is also suggesting that BMW is planning a capacity increase.
The report mentions that this facility is to come up early in 2015 and that it takes in an investment of Rs 100 crore.
The development indicates that BMW intends to take the competition from its German counterparts, Audi and Mercedes-Benz, to the next level.
The effect of assembling engines locally is substantial on costs as it will reduce the cost of the CKD kit, which could bring some models under the $40,000 mark which attracts higher duty.
[Source - Autocar Professional]