Case Interview Question #00350: Our client BMW (FWB: BMW) is a German luxury car maker that manufactures automobile, motorcycle and engines. It also owns and produces the Mini marque, and is the parent company of Rolls-Royce Motor Cars. Headquartered in Munich, Germany, the BMW group produced more than 1,400,000 automobiles and over 110,000 motorcycles worldwide across all its brands in 2010.
Recently, The CEO of BMW wants to grow business and is looking into selling cars in Bangladesh (a sovereign state located in South Asia and bordered by India). The current population of Bangladesh is estimated to be 142 million and the country’s GDP growth is 5% per year during the last three years. The CEO of BMW wants you to help find out whether they can break even in three years if his company enters the Bangladesh market. How would you go about it?
Additional Information: (to be given to you if asked)
- Currently, the only luxury car sold in Bangladesh is Mercedes-Benz (FWB: DAI) and they have been in this market for the past 10 years.
- Mercedes-Benz imported and sold 10,000 luxury cars in this market over the past 10 years, and has their own dealership in Bangladesh.
- There are ~1000 new buyers for luxury cars in Bangladesh each year.
- Existing luxury car owners replace their cars every 10 years (the interviewee should calculate how many new cars are sold to existing owners – 1000 per year, and therefore the total market size per year is 2000 new cars)
- If BMW enters the market, they will have 30% (The interviewer should not give this info out right away, ask the candidate to estimate first) market share each year.
- The price Mercedes-Benz charges is $100,000 per car.
- Assume the discount rate is zero.
1. Ask the candidate how to estimate BMW’s market share.