BMW AG plans to formally enter the Indian market as part of its international market strategy by establishing a production and sales subsidiary.

The German auto maker says it will build an assembly plant in Chennai in southern India and expand its dealership network to all metropolitan centers of the country.

“The Indian automobile market offers significant growth potential in the long term,” BMW Chairman Helmut Panke says in a statement. “With our increased presence there, we will be well positioned to fully tap into this potential. This marks a further important step in our Asia strategy.”

The luxury auto maker is aiming for annual sales in the Asian region of 150,000 BMW, Mini and Rolls-Royce vehicles by 2008. The company sold 95,482 vehicles in Asia in fiscal 2004.

BMW 3-Series

BMW will own 100% of the Indian production and sales subsidiary. Operations will begin in early 2007, with an initial investment of €20 million ($23.8 million). The plant will produce BMW 3- and 5-Series sedans solely for the domestic market.

In addition to operating the assembly plant and importing BMW cars, the subsidiary also will develop a dealer organization, set pricing and product strategy, as well as control marketing and aftersales.

In the medium term, the company will employ about 200 people in India. Up to 600 additional jobs will be created in the dealer and service network, BMW says.

Two intermediary dealers with three outlets now represent BMW in the Indian market. In fiscal 2004, the company delivered 122 BMW-brand vehicles through the network. In first-half 2005, deliveries totaled 100 units.