BMW gears up for Asian auto boom, increase investment
BMW gears up for Asian auto boom, increase investment
Eileen Ng, Agence France-Presse, Kuala Lumpur
German luxury car maker BMW unveiled plans on Tuesday to expand in Malaysia as part of moves to strengthen its presence in Asia where it plans to double sales to 150,000 units in the next five years.
BMW will invest 93 million ringgit (US$24.5 million) to set up a wholesale company in Malaysia and two regional centers for information technology and parts distribution, said group senior sales vice president Lueder Paysen.
Paysen said BMW would relocate its regional parts distribution center from Singapore to the Port of Tanjung Pelepas in southern Johor state by mid-2004 due to the higher sales potential in Malaysia, which is the biggest car market in Southeast Asia.
The move is seen as a setback to Singapore and reflects the economic rivalry between the two senior members of the Association of Southeast Asian Nations (ASEAN).
Paysen said, however, that Singapore would remain BMW's regional corporate office and the move was aimed at gearing up for a boom in Asia's fast growing auto markets in the long-term.
He said BMW also hoped to tap the benefits of the ASEAN Free Trade Area (AFTA) under which car import duties were cut to below five percent this year, except Malaysia which has delayed market opening until 2005.
"The European market will not really be growing in the next 10 years to come, the U.S. market maybe a little bit but real growth in the automobile industry will come in Asia," Paysen told a news conference.
"The BMW Group is expanding its business in Asia and we are choosing the best location for each type of business, especially in ASEAN which is moving towards a single common market.
"Our sole manufacturing plant is in Thailand, our parts distribution and IT center in Malaysia and other regional services will continue to be supported out of Singapore."
The BMW Group sold 78,000 BMW and Mini cars in Asia last year and Paysen said it "expects to double sales to 150,000 units over the next five years" driven by new models, a more professional network and growing demand in China.
BMW's new production joint-venture in China will be operational in October with targeted output of 30,000 units, he said.
Asian sales currently account for less than 10 percent of BMW's global revenue but officials said the company aimed to raise this to 25 percent over the next 10-15 years.
Overall, BMW accounts for one-fifth of the luxury car segment in Asia and is especially strong in certain markets.
Japan, South Korea, China and Taiwan are BMW's key markets. Paysen said BMW foresee vast potential in India and in ASEAN markets under AFTA.
He said the new wholesale company in Malaysia, which is its 28th such subsidiary worldwide and sixth in Asia, would be a 51:49 joint venture between BMW and local franchise Sime Darby Bhd.
"We aim to be the number one premium car maker in Malaysia. We are not moving to Malaysia because of tax incentives. We are expanding our operations here because of strategic considerations," he added.
Sime, which last year sold 2,401 BMW and Mini cars in Malaysia for 37 percent of the premium car segment, keeps its assembly rights and remains the key BMW car dealer with 8 out of 14 outlets under its wing.
Under the new venture, it has the first right of refusal for any new dealership opportunities in Malaysia for the next three years. Sime also retains its sole distributorship in Singapore and Hong Kong.
BMW is following other foreign carmakers including Japan's Honda Motor and Germany's DaimlerChrysler which have begun phasing out franchises to cut out middlemen and so boost their direct presence in the region.