BMW Group builds Manufacturing Plant in Thailand
The German BMW Group will set up a new manufacturing plant in Thailand to assemble BMW and Rover Group vehicles for the local market, it announced today. For this purpose, a new company, BMW Manufacturing Thailand Co.,Ltd. has been formed. In addition , the also newly established wholeasale subsidiary Bayerische Motoren Werke(Thailnad) Co., Ltd. officially opened with a ceremony in Bangkok on October was 4, 1998.
The new plant will be located at the Amata City Industrial Park at the Eastern Seaboard of Thailand. The ground breaking will take place in a few weeks. The initial investment of more than Baht 1,000,000,000 (over DM 43 million) will include an automobile assemble for BMW cars, Land Rover vehicles and Rover cars, which will start operations in early 2000. In the first year, the vehicle assembly will offer 250 employees a long-term job. By the year 2004, a capacity of 10,000 units will be installed and between 500 to 600 people will be employed in total.
BMW will maintain the relationship and ensure business of the Group's long-term partners in Thailand-the Leenutapong family for BMW and the Phaoenchoke family for Rover Group. Therefore, it is planned that BMW Manufacturing(Thailand) will source painted bodies for the vehicle production from the respective plants of both families. In the past, both partners have substantially invested in these facilities to meet BMW's world-wide quality standards. Together with further parts and components supplies from Thai companies, BMW's investment in Thailand will provide secure jobs for an additional 500 to 600 people.
Dr.Wolfgang Reitzle, Member of the Board of BMW AG, responsible for Market and Product, said at the press conference in Bangkok today: "The decision for this plant truly shows that a long-term strategy of a company should not be based on a current economic climate or a temporarily low cost level. The establshment of a manufacturing plant is always a long-term investment."
He commented further that "the geographical location of Thailand and the planned or already completed infrastructure projects offer an ideal location for an automobile assemble. This is meant not only to serve the Thai market but the region of South East Asia. And BMW has a clear strategy to utilise this." BMW intends to export products to the neighbouring countries in South East Asia in the future from the new manufacturing plant in Thailand. But before the company would embark on this second step, a conducive political and trading environment has to be created by the Governments of the Countries in this region. Today, the economic and legal framework of most South East Asian countries is following a rather nationalistic approach including high import barriers. Therefore, it would not make economic sense for BMW to assemble cars in Thailand for other countries in the regio.
This would change immediately if the ASEAN countries would implement the proposed and often discussed AFTA. The emergence of a single market in ASEAN would not only provide a solid basis for BMW's operations in South East Asia but would also provide the best incentive for other global companies to invest in the region. The BMW Group has already anticipated a possible free trade zone in its investment plans for Thailand. BMW has obtained an option to buy additional land next to its site at the Eastern Seaboard. As part of this possible future expansion, there would be higher investments, increased production volume and more jobs.
But Dr. Reitzle stated clearly: "A liberal and open economic framework in South East Asia is the fundamental requirement for and extension of BMW's new manufacturing base in Thailand"
In the second half of 1997, BMW stared to establish its own wholesale subsidiary in Bangkok. The registered company Bayerische Motoren Werke (Thailand) Co.,Ltd.-(BMW Thailand) - will be officially opened on October 4, 1998.
The activites of BMW Thailand include the sholesale of BMW cars, motorcycles, spare parts and accessories to Thailand. First target of the new company is to strengthen the independent dealer network and the after-sales service. A professional dealer development, price and volume planning, marketing, after-sales service support and traning is in the process to be implemented. The company will also develop an attractive range of financing and leasing schemes for individual and corporate customers.
Currently, the dealer network of BMW Thailand consists of 17 authorised dealers, 7 in Bangkok and 10 in other important regions of Thailand. BMW Thailand aims to extend this dealer and service network. While in Bangkok, BMW dealers generally are selling exclusively BMW brand products, dealers outside Thailand's capital will also sell Rover Group vehicles. This sales strategy allows BMW to also establish dealers even in less economically strong areas of Thailand.
To guarantee BMW's world-wide high after-sales and service standard in Thailand, substantial investments have been made or ate on lits way. A pool of 8 BMW trained German service engineers has been set-up to support the dealers and to transfer know-how. The latest BMW service technologies are being installed at the dealers, including BMW's sophisticated service computers.
To ensure an efficient and fast parts supply to some 42,000 BMW owners in Thailand, a central warehouse is being built up in Bangkok, managing some different 11,000 BMW parts. Dealers can directly order those parts on-line which can be delivered within 24 hours. Parts which are not available in Bangkok can be ordered from BMW's regional parts centre in Singapore or directly from BMW AG.
Mr.Jesus Cordoba, President of BMW Thailand, stated at the press conference today:"We believe our long-term vision will be a guarantee to the Thai BMW customers. Today we are ready to commit all our expertise and experience to deliver a reliable service through our dealer network, on which customers can rely and trust. We are here for a better tomorrow. That's our commitment".
BMW Thailand is the fourth BMW organisation in Asia. BMW Japan was founded in 1981, BMW Asia (for the markets in South East Asia) in 1985 and BMW Korea in 1995. In all countries, the direct engagement of BMW in the respective market led to a leading position of BMW in the upper market segment, a position BMW has reached in many world markets.
In 1997, the BMW Group sold 2,366 vehicles in Thailand (BMW: 1,841; Land Rover: 331;Rover Cars: 194). The total passenger car market reached a level of 132,060 units of which 17,340 were considered to be in the Luxury Performance Segment.
For 1998, the BMW Group forecasts a total passenger car market of 43,000 units (-67.4%) in Thailand, the luxury segment might drop to 5,700 cars (-67.1%). Sales of BMW Group products will come to a lower level due to the current tendency of customers to buy smaller cars, increased import taxes for cars and car kits and restrictive financing possibilities. In the first 8 months of 1998, the BMW Group delivered 885 vehicles (BMW:665, -66%; Rover Cars: 61, -65.5%; Land Rover: 159, -42.8%). End.