BMW setting up Asia big-bike production

Corporate November 28, 2013 00:00


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BMW has chosen Thailand as its first production base for motorcycles in Asia.

Stephan Schaller, head of BMW Motorrad, the German company’s motorcycle unit, said deliveries of the locally assembled F800 R, its mid-sized model, in the Thai market would start through its dealership network next quarter.

BMW’s Rayong facility will be the only one in the world that makes all three of the company’s vehicle brands – BMW and Mini cars and BMW Motorrad motorcycles.

BMW had produced motorcycles only in Berlin for a long time until three years ago when it started production in Brazil. Thailand has become the third site.

BMW has seen a sharp rise in demand for big bikes especially in Asia and is now about to set up motorcycle production in more countries.

In the medium term, BMW will explore options to expand the Rayong plant to include more motorbike models for other Asian markets.

“The first priority is to increase sales in the country. There is an opportunity that we can extend to exports and make use of the free-trade agreement. But there is no concrete plan at present,” Schaller said.

BMW has seen its motorcycle sales racing ahead at a double-digit clip in Thailand. It sold 320 units during the first nine months of this year, beating its own target, though still chasing Honda, Ducati and Kawasaki in the local market. The market for big bikes in Thailand is expected to reach 5,000 units this year.

Last year, BMW sold 100,600 motorcycles worldwide, of which 16-17 per cent were in Asia. Its sales climbed 8 per cent to 101,000 units worldwide during the first 10 months of this year.

Policy stability is a major concern of foreign investors and the “political development in Thailand is not very good”, Schaller said.

The “surprise” excise-tax increase on big bikes announced by the government last December was also a source of concern for investors.

“Stability [of government policy], as an investor, for us, it is very important. As you’ve seen, surprisingly, the tax increase in one night … this is a concern,” he said.

Schaller, in a special interview with a group of reporters in Bangkok, acknowledged that the excise-tax increase was the main reason BMW decided to start local assembly of its motorcycles in the country.

The government has raised the excise tax on motorcycles from 3-5 per cent to 10 per cent for models with 500cc-1,000cc engines and 20 per cent for those over 1,000cc. The excise tax is levied on top of import duties.

Heiner Faust, Motorrad’s vice president for sales and marketing, said the investment was not high since it could utilise its existing Rayong factory that assembles BMW and Mini cars to install the motorcycle assembly line.

Among the big-bike makers, Honda, Ducati and Kawasaki already have factories in Thailand. Triumph also has a plant in Chon Buri but it exports all of the output.

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