Force Motors which already assembles engines for Mercedes-Benz at its Pune facility will be setting up a new plant at Chengalpet in Tamil Nadu. The plant will have an investment of Rs 100crore and is expected to be operational by early next year, subject to procurement of necessary approvals.
Prasan Firodia, MD, Force Motors, said, "The Board of Directors of the company have approved a new plant to be set up in Tamil Nadu which will be a dedicated facility to assemble and test passenger car engines, and other aggregates for an international original equipment manufacturer. This is a long term contract and will need an investment of Rs. 100 crores to set up the plant. The plant would be operational by early next year subject to the regulatory clearances.”
That OEM (Original Equipment Manufacturer) in the quote is BMW. The new upcoming plant is located close to BMW's vehicle assembly facility, which is also located in the same area. The plant will not only manufacture but will also have a section dedicated to testing the engines of passenger cars.
This move by BMW could be another trigger for a price war between its rivals. This could happen because assembly of engines locally will have a significant impact on the duty applied to the CKD kit thus lowering the overall price.