BMW floats finance arm to push India sales

BMW Financial Services, the vehicle financing arm of Bayerische Motoren Werke AG - the world's largest luxury carmaker - on Tuesday opened shop in India as the company seeks to deliver a knockout blow to its nearest rival in the market, Mercedes Benz.

The finance entity, which is a wholly-owned subsidiary of the BMW Group, has received a licence from the Reserve Bank of India to operate as a non-banking finance company (NBFC). Set up with an initial investment of $50 million (Rs222 crore), BMW Financial Services will be based in Gurgaon.

BMW is locked in a pitched battle with Mercedes for the top slot in luxury car sales in India. The new kid on the block overtook its more venerable rival in sales last year. Since then, there has been a no-holds-barred battle between BMW and Daimler AG, which makes and sells Mercedes cars.

Mercedes, on its part, has said it will begin operations of its finance arm Daimler Financial Services in India by 2011. But it is reported that the company is yet to apply for regulatory approvals for commencing vehicle financing business in the country.

BMW Financial Services, which operates in 31 countries besides India and has a global customer base of three million, will have three business 'verticals' in India - retail, finance, commercial finance (for BMW dealerships) along with auto insurance solutions.

"We would provide tailor-made financial services through our dealers and also cater to other brands ranging from Maruti to Honda, where our dealers have a commercial interest," Sanjiv Shah, the recently-appointed managing director and chief executive officer of BMW Financial, told journalists in New Delhi.