BMW Group in Asia 1999: BMW, Land Rover improve position, Group restructures operations

The BMW brand increased its share of the luxury car segment in Asia to
30% in 1999 and took the top position in this segment in five markets.
Unit sales were up 1 per cent to more than 50,000 cars and the brand
also improved its sales performance in 6 key Asian countries. Not to
be outdone, deliveries of the off-road Land Rover brand jumped 20% to
more than 6,000 vehicles. However, sales of the Rover brand fell by 16%
to about 12,500 units, though this was a natural decline given the fact
that all its models were changed in 1999. As a whole, the BMW Group
in Asia kept its unit sales at about 69,000 units, roughly the same
level as 1998. This was achieved against an 11% decline in the luxury
car segment to some 166,000 cars. The overall passenger car market
developed differently though, increasing 5% to 5.5 million vehicles.
But the bulk of this increase were mainly from the domestic brands of
S.Korea which jumped by some 350,000 units and Malaysia which rose by
some 80,000 cars. In 1999, the BMW Group was also officially formed and
is now operational worldwide overseeing the five brands - BMW, Rover,
Land Rover, MG and Mini. This means that BMW subsidiaries and regional
offices have taken over the operations of the Rover Group. Following
this, the group is now restructuring its 450-outlet strong dealer
network in Asia with the intention of offering dealers the freedom to
sell the Group's full range of products. This will enhance customer
service, improve the dealer network and allow the BMW Group to offer a
wider range of choices to discerning customers. The group will also
continue to position itself for the long-term. It has been continuing
with investments even during the recession, such as the set up of the
BMW Thailand subsidiary in 1998 and the construction there of the
Group's first wholly-owned assembly plant in Asia. The car industry
in Asia is expected to wake up from its slumber of the last 2 years -
the last quarter of 1999 has already demonstrated great promise. And
with the introduction of new models such as the Z8 supersports car, the
new 3 Series convertible, the X5 and new products from Rover, the BMW
Group is expected to see an improvement from 1999. Japan BMW car
registrations rose some 6% to 35,399 units, equal to one third of the
luxury performance segment. These sales were achieved despite overall
registrations falling 7% to 2.9 million and European luxury cars
dropping 4% to some 96,000 cars. Rover and Mini brands reached the
end of their model cycles, thus registrations decreased 17% to some
11,000 units. However, there is no other market in the world where
more Minis were sold than in Japan, with a total of 5,726 cars last
year. Land Rover registrations reflected the global success of the
brand, with a 7% increase to 3,311 units. BMW's motorcycle
registrations, although showing a decline, did so at a slower rate than
the overall market, that is to say a 12% decline versus 18% overall.
Combining all the car brands, vehicle registrations for the BMW Group in
Japan stood at 49,661 units, very close to last year's sales. Despite
the sluggish economy last year, BMW continued with its activities and
investments in Japan. One example is the opening of the BMW Pulse
showroom located in the famous upscale Ginza area of Tokyo. Another
very different but equally important example is the company's ISO 14001
certification for Ecological Management Systems. Rover Japan was
relocated and its wholesales operations integrated into BMW Japan,
resulting in more efficient distribution channels. With some 300 dealer
outlets to handle the market, more customers will be served better
through the improved operations of dealers. In addition, successful
customer development programs for BMW will also be extended to Rover
and Land Rover this year. The Rover 75, which was chosen as Japan's
'Import Car of the Year' at the end of 1999 provides a further impetus
to the brand. Finally, new products to be launched in Japan this year
such as the Z8 supersports car, the new 3 Series convertible, the X5
Sports Activity Vehicle and the Land Rover Freelander in autumn,
suggests a successful year for the BMW Group in Japan. South East Asia
In Singapore, Malaysia and the Philippines, the brand BMW sold more cars
last year than in 1998 - up 28 percent in Singapore, and up 11 percent
for both Malaysia and the Philippines. BMW maintained its No.1
position in the luxury segments of Indonesia, Philippines and Vietnam.
In Taiwan, BMW's biggest import market in S.E Asia, sales fell 15% due
to the political tensions and the earthquake. But BMW has for the first
time attained more than 10 percent of the imported car segment in
Taiwan. Taken as a whole, BMW sales in S.E Asia contracted by 18
percent to about 12,000 units, a slightly larger decline was seen in
the luxury segment in the region which fell to some 63,000 units. The
total number of passenger cars in S.E Asia developed positively though,
growing 9% to about 1.6 million cars, but still behind the record sales
of 1.7 million in 1997. The figures for BMW could have been higher but
for the fact that the locally-assembled new 3 Series was only launched
in Malaysia in September and in Indonesia, throughout October 1999.
Deliveries of BMW Motorcycles continued to increase in popularity
breaking all previous sales figures. BMW bikes registered a 36 percent
increase in deliveries to more than 400 units, and have become the
motorbikes of choice for the authorities in Taiwan. Land Rover was
even more successful, with a 48% rise in registrations. This can be
attributed to the new Freelander and the new Discovery. In Malaysia,
this rugged and sophisticated 7-seater vehicle is locally-assembled -
the first Complete Knock Down (CKD) production for Discovery in the
world. Like the decision to build locally-assembled 3 Series in
Malaysia and Indonesia, the new Discovery production is also a showcase
of BMW Group's commitment and confidence in the region, especially when
other companies were pulling out of the region. As for Rover,
deliveries fell 12% which was expected given that all its models were
changed in 1999. The award-winning Rover 75 was launched last year in
Singapore, Hong Kong and Brunei. Later this year the small- and
medium-size 25 and 45 models will be introduced. With a complete range,
the Rover brand will soon become recognised as a distinctly British
marque that offers unsurpassed comfort and style. The current year
will also see the Group Solus approach for dealers and importers. This
means that a single importer should be responsible for marketing the
entire range of group vehicles in a country, with the dealers offering
all brands available. This is already the case for Brunei, Guam,
Philippines, New Caledonia, Fiji, India, Sri Lanka, and China. It is
planned to extend this to the larger markets in Hong Kong, Malaysia and
Taiwan soon. This re-organisation will further maximise the already
excellent network of outlets the BMW Group has in S.E Asia, thus fully
exploiting the potential of all new products on offer this year, as
well as the successful relationship with the group's Asian partners.
Thailand In 1999, the brand BMW achieved the No.1 position in the luxury
segment in Thailand, with an 82% sales increase to 1,840 cars and a
luxury segment share of one-third. New products of the Land Rover and
Rover brands were not introduced in Thailand in 1999, thus accounting
for the lower registrations. BMW's sales success were mainly due to
three reasons. First, the public's awareness of improvements in
after-sales services, as a result of a 260 million baht investment in
dealer workshops and a new central parts warehouse for faster spare
parts delivery nationwide. Second, the successful launch of financing
and leasing services for individuals and corporate customers were very
well received. Third, the general improvement in Thailand's economy
and retail sentiment. This brought about a 43% recovery of car
registrations from 1998 to some 67,000 units and a 9% improvement in
the luxury segment to about 5,500 cars. For the current year, the new
BMW Thailand Manufacturing Plant is due to start production of the new
3 Series sedan in a few months. Like every where else it has been
introduced, this award winning car will be highly sought after in
Thailand and provide a strong basis for sales in 2000. For the auto
industry in Thailand as a whole, this year will also be exciting and
challenging as the Government has lifted the local content requirement
from the January 1, 2000. On the one hand, the local parts suppliers
will face tough competition, but it should also be an opportunity to
expand internationally. In addition, customers will have a wider choice
of new products to choose from. Korea The brands BMW and Land Rover had
an excellent year in South Korea registering sales increases of 160%
and 440% respectively. With combined sales of some 1000 vehicles, the
BMW Group conquered 41% of the import market. And although the import
segment rose 16% to 2,401 units, it only has a meagre 0.2% of the
Korean market - still 77% below the import figure in the pre crisis
year of 1996. Clearly one of the main winners in the incredible
economic turnaround of Korea over the last 18-months was the domestic
car market enjoying a 63% growth in domestic registrations and almost
20% growth in exports. Despite the tough environment for foreign car
companies, BMW launched an ambitious marketing strategy, introducing 8
new models, the most in the industry and started the BMW motorcycle
business. BMW also continued recruiting new dealers to further expand
sales and service outlets, while some competitors withdrew their
business entirely. But sales are not the only measure of success. As
in the previous year, BMW won all brand awards and topped all brand
surveys from highly reputable media and research companies last year as
well. For the current year, there are some positive signs for the
import market. Japanese manufacturers will enter the Korean market for
the first time and the importers will hold an 'Korean Import Car
Motorshow' in May. This became necessary, as the importers were not
invited to participate in the 'Seoul Motorshow' last year. Finally,
some of the European manufacturers, that left Korea when the crisis
hit, will probably re-enter the market thus giving more choices to the
Korean customer and hopefully chipping away at the anti-import cars
mentality. For BMW and Land Rover, the market launch of new models,
including diesel models for the first time, the strong dealer network
and the excellent image of the brand, are solid foundations for another
strong year.