LIKE other global carmakers, BMW Group realised the fact that the Asian market is too big to be ignored. And to acquire a slice of the lucrative market, the German luxury carmaker has put Asia as its focus of attention in the next ten years.
“Asia is playing a central role in our worldwide plans as we are convinced of the long-term positive economic prospects for the region,” said BMW Group director Dr Michael Ganal.
The group expects a promising double-digit growth rates in the Asia Pacific market.
“We plan to double our sales in Asia from 78,000 units last year to about 150,000 in the future i.e. in the next five-years.
“We have set a target to sell around 1.4 million vehicles in 2008 worldwide,” Ganal announced in a recent press conference in Singapore.
The group had delivered 1.057 million cars (BMW and MINI) worldwide last year.
While working hard to retain existing markets, BMW Group is penetrating new markets with new products.
“The expansion of BMW Group is following the maxim of specifically going where we can do business successfully with our strength.
“It is decisive for us to tackle both growth and expansion at the same time. We are set to conquer the market,” said Ganal.
He said the group wanted to set foot in new markets where it had not been present or sufficiently present until now.
The luxury carmaker has also step up efforts to expand its product portfolio.
Previously, BMW Group was a one-brand manufacturer with only three car models. Now, it has three brands – BMW, MINI and Rolls Royce – in its portfolio.
In the near future, BMW Group would have eleven models (series) in its portfolio, said Ganal. “This is an expansion that we have never implemented to such an extent for our cars in the history of the company.”
The group acquired the rights to the Rolls-Royce brand for automotive business from its owner Rolls-Royce Plc in 1998. It takes over full responsibility, including production and distribution beginning this year.
To support the sales growth, BMW Group will continue to pursue its motto i.e. production follows the market.
“We are continuing to expand our production capacities in Asia,” he said.
The group, which is importing completely built up (CBU) units into China mainland, is waiting for final approval from the Chinese government to form a joint venture with Brilliance China Automotive – manufacturer of Minivans – to set up manufacturing facilities in Shenyang.
The plant in China is planned to have an annual capacity of 30,000 BMW cars.
In July last year, the group has begun the new BMW 7 series production in its plant in Rayong, Thailand. The Thai production facilities is the group's regional hub for Asean.
According to Ganal, BMW Group is the first premium carmaker to sell car under Asean Free Trade Agreement (Afta) when the BMW 330iA models from Thailand are exported to Indonesia, while Indonesia exports the 530iA to Thailand, starting from this year.
The group also intends to commence component parts manufacturing in Malaysia and supply them to other BMW plants in Asia when the implementation of Afta in the country's motor industry takes place in 2005.
BMW Group has five assembly plants for BMW automobiles in Asia. The plants are located in Thailand, Indonesia, Malaysia, the Philippines, and Vietnam.
These plants are mainly operated in cooperation with external partners except for the one in Thailand, which is a wholly-owned subsidiary of the group.
The German carmaker's ambitious target set for Asia is spurred by the impressive sales performance in the region last year.
Car sales in Asia climbed to a record of 78,527 cars, a 28% increase over the previous year's figure of 61,166 units, despite a 7% contraction in the luxury car segment. The record sales figure represents a 23% share of the upmarket car segment in Asia.
BMW cars contributed 67,888 units that is another record achieved last year, while MINI, 10,639 units.
The group's worldwide sales rose nearly 10% to 42.28bil euro in 2002 from 38.46bil euro in the previous year.
BMW Group had already put its plan in place years ago to grab a lion's share in Asia where better growth prospects is expected in this part of the world.
And the plans are already bearing fruits.
“The current success of BMW Group in Asia is very much related to the policy to set up our own subsidiary in major markets,” said BMW Group senior vice-president (sales for Asia, Pacific, Africa, East Europe) Luder Paysen.
Japan is the group's largest market in Asia with 45,275 units sold last year, followed by China (6,677 units) and Taiwan (6,078).
To get close to its Asian customers, BMW Group decided to establish its own sale subsidiaries in the region, a strategy that allows active involvement in distribution and marketing.
BMW Group is the first European premium car manufacturer to establish own subsidiaries in Asia. Its first sales subsidiary was set up in Japan in 1981.
In the last eight years, BMW Group had set up sales units in South Korea, Thailand, Indonesia, and the Philippines.
The establishment of a BMW subsidiary separates the responsibilities between wholesale and retail as the group believes that both parties are experts in their respective functions.
BMW unit will take care of the wholesale activities such as distribution, assembly and marketing, while dealers will be involved in retailing.
All the Asian subsidiaries are wholly owned by BMW Group except for BMW Philippines. The Philippines subsidiary is a 70:30 joint venture between BMW Group and Asian Carmakers Corp, the former importer of BMW in the Philippines.
Malaysia, the largest car market in Asean in term of car sales, is the only major Asian market where the group does not have its own sale subsidiary.
The group is currently in talks with Sime Darby Bhd and Cartrade Sdn Bhd to set up a local sales subsidiary.
BMW Group also intends to move its logistics hub to Johor from Singapore and to set up a regional data centre in Cyberjaya to complement the operations of its Singapore regional headquarters