BMW is posting record sales for its passenger cars and motorcycles in Thailand and worldwide. Matthias Pfalz, President of BMW Group Thailand since January 2011, talks to Maxmilian Wechsler about the company’s spectacular performance
Tell us briefly about yourself?
I have been with BMW (Bavarian Motor Works) for over 20 years. Prior to joining BMW Group Thailand, I served in various functions in BMW’s headquarters and subsidiaries around the world, including the United States, New Zealand and Argentina. My previous position was as managing director of BMW Group’s own retail outlet in Munich.
As the President of BMW Group Thailand, I am responsible for managing the overall business in the country, including BMW and MINI automobiles as well as BMW motorcycles.
Tell us briefly about yourself?
I have been with BMW (Bavarian Motor Works) for over 20 years. Prior to joining BMW Group Thailand, I served in various functions in BMW’s headquarters and subsidiaries around the world, including the United States, New Zealand and Argentina. My previous position was as managing director of BMW Group’s own retail outlet in Munich.
As the President of BMW Group Thailand, I am responsible for managing the overall business in the country, including BMW and MINI automobiles as well as BMW motorcycles.
How is the company performing worldwide and in Thailand?
2011 concluded with the best results ever, with sales of more than 1.6 million vehicles. This represents a growth of 14.2%.
The trend is continuing with all-time highs in the first quarter of 2012. Retail volumes for the year to the end of March increased by more than 40,000 vehicles to 425,528 units, a growth of 11.2% compared with the first quarter of 2011. BMW also increased retail volumes in its three largest single markets of Germany, the U.S. and China, among other places.
BMW Group sales in China are particularly encouraging. From January to the end of March a total of 80,014 vehicles were delivered, an increase of 37% compared with the same period last year.
Asia, particularly the Chinese automobile market, is one of the most important for BMW. That’s why we are running a joint venture plant in Shenyang, where more than 300 engineers are already working.
BMW has also recently opened a design studio in Shanghai to contribute design expertise and innovative ideas and also offer strategic design advice to external clients in China. At the same location BMW will open the Connected Drive Lab to develop functions for infotainment, convenience, and safety, especially for our Chinese customers.
Here in Thailand BMW Group has set another milestone by achieving the highest sales since we came here in 1997, with 4,243 vehicles in total – 3,858 for BMW and 385 for MINI. For BMW, the achievement of 3,858 vehicles in 2011 represented a growth of 28% when compared to the previous year, another all-time first quarter high.
The good news is that in the first quarter of 2012 the sales of BMW cars increased by a staggering 48% from the same period last year, from 827 to 1,227 vehicles. Sales of the MINI totaled 100, a 14% increase, and 79 BMW Motorrads were sold, a 114% increase.
A major part of our success in Thailand and worldwide was contributed by sales of the BMW 5 Series, which grew to nearly 50% of the total BMW volume in 2011. There are now eight model variations. This comprises four petrol models, 520i, 528i, 528i Sport, 520i Touring; three diesel models, 520d, 525d, 520d Touring; and one full-hybrid, BMW ActiveHybrid 5, which has recently been introduced in Thailand.
In our BMW 5 Series, the new four-cylinder engines with BMW TwinPower Turbo technology add further talent to the line-up of petrol and diesel powerplants.
In which countries are BMWs assembled?
Our cars are manufactured at 13 locations worldwide. Principal among the production and assembly facilities are the factories in Dingolfing, Leipzig, Munich, and Regensburg in Germany, followed by factories in Rosslyn, South Africa and Spartanburg, United States, along with the joint venture in Shenyang, China.
The BMW Group also operates “completely knocked down (CKD) factories, where vehicles are assembled from imported and locally produced components. The CKD factories, which are owned and operated by the BMW Group, are in Chennai, India and here in Thailand at Rayong. Others operated in cooperation with external partners are in Jakarta, Indonesia; Cairo, Egypt; Kaliningrad, Russia; and Kulim, Malaysia.
As for MINI, the heart of production is in the United Kingdom, consisting of factories in Oxford, Hams Hall and Swindon. The pressings and body components are made in Swindon, and delivered to the Oxford assembly facility on a just-in-time basis. The engines, assembled in Hams Hall, also arrive at the production line immediately before they are needed. The MINI Countryman is built at another location in Graz, Austria.
Tell us about the BMW factory in Rayong.
BMW Manufacturing Thailand is based in the Amata Industrial Estate in Rayong Province. The plant began operations in April 2000, with direct investment from BMW Group AG of
1.8 billion baht. The facility has an area of 75,000 square meters. BMW Manufacturing Thailand is one of the most efficient and flexible assembly plants in the world, which is a key to our success here.
Since its commencement in 2000, BMW Manufacturing Thailand has played a significant role in enhancing the competitiveness of BMW in the Thai market. The plant assembles BMW’s wide product range, with five model series (3 Series, 5 Series, 7 Series, X1 and X3), and a total of 22 model variants. The plant is ready to integrate further models on the shop-floor.
BMW Manufacturing Thailand also provides technological support to other BMW manufacturers in the ASEAN region, such as launch support, staff training, quality assurance, as well as purchasing and supplier development.
Are you satisfied with BMW and MINI dealers in Thailand?
Our customer satisfaction will always be the first priority, but when our customers are satisfied, then we have to do more for them in the future.
In this regard, we will always plan our dealer network on a long-term basis in order to ensure that we have adequate facilities to support our future volume growth. This is vital for our business since the investment is not small, and it takes time to develop not only the “hardware” in terms of land selection, planning and construction. We have to also prepare the “software” in terms of staff competencies.
Does the “grey market” affect your business?
Strong brand recognition will always lead to arbitrage opportunities. However, the mainstream of our BMW and MINI customers still go for authorized dealers – for the services and re-sale value in the future. BMW and MINI brands have proven success in the Thai market, which interestingly leads to grey importers who come in to take advantage of the situation and customers.
However, service and “peace-of-mind” when it comes to maintenance are top priorities for customers making their buying decisions. That’s why BMW offers a service inclusive warranty for five years or 100,000 km, and MINI for three years or 50,000 km. Vehicles with proven records of excellent maintenance will, of course, gain better resale value.
What about BMW motorcycles in Thailand? How big is the market?
The market for big bikes of over 500cc has grown massively over the past few years. We have had a very successful start in the first three months of 2012 with 114% growth year-on-year, to close the first quarter with 79 BMW motorcycles sold. We have recently introduced the new exciting BMW motorrad to the Thai Market, i.e. the K 1600 GT, S 1000 RR, and two maxi-scooters, C600 Sport and C650 GT. All three received tremendous interest at the Bangkok International Motor Show.
Why are so many powerful cars made when countries like Thailand impose relatively low speed limits?
Speed limits are enforced because of safety concerns. In the automotive world, all components are developed not only to bring out the best driving performance, but also for safety concerns. We have developed technologies to ensure that our drivers have the best features to assist them in any driving conditions and at any driving speed necessary – head-up display, night vision, Dynamic Stability Control (DSC), adaptive headlights, etc.
How will engines evolve in the future?
Vehicles with conventional petrol and diesel engines are being continually improved with the long term aim of bringing about emission-free transportation. Innovations such as Brake Energy Regeneration and BMW TwinPower Turbo technology help reduce fuel consumption and emissions, while improving performance and driving enjoyment.
BMW now offers the first hybrid-drive production vehicles, which deliver savings of up to 20%.
In 2011, a new type of dynamic vehicle hit the streets – the fully electric BMW ActiveE. It made its debut as part of a limited production run and small pilot project. With room for four people and a 200-litre luggage space, it points the way to the emission-free transport of the future.
BMW is also carrying out research into alternative fuel sources such as hydrogen. In 2006, we unveiled the first hydrogen-powered luxury saloon for everyday use.
What are the future trends for cars in terms of size, engines and fuel?
The aim of further reducing fuel consumption and CO2 emissions in motor vehicles has led to a new trend referred to as “engine downsizing” by industry insiders. This means going away from large-capacity naturally-aspirated engines towards smaller-sized turbo units.
BMW has gone a further step in its turbocharger development, using BMW TwinPower Turbo technology. This allows not only for higher outputs, increased torque at lower engine speeds and better fuel economy, but these engines are also noticeably more responsive compared to conventional turbo units.
If we were to compare technology over the past two-three decades, we could only achieve more than 200hp from the larger engines, such as the 3.4 litre
6-cylinder BMW 535i, which produced 208 hp at 5,700 rpm. Today, 218 hp at 5,000-6,500 rpm is standard performance for the 2.0 litre, 4-cylinder engine with BMW TwinPower Turbo technology.
The launch of the new BMW ActiveHybrid 5 recently took place at the Bangkok International Motor Show in 2012, giving our strongest-selling 5 Series an attractive hybrid variant in its lineup.
Our future is diverse. There is no such thing as “either, or.” For BMW, the future is about “as well as.”
2011 concluded with the best results ever, with sales of more than 1.6 million vehicles. This represents a growth of 14.2%.
The trend is continuing with all-time highs in the first quarter of 2012. Retail volumes for the year to the end of March increased by more than 40,000 vehicles to 425,528 units, a growth of 11.2% compared with the first quarter of 2011. BMW also increased retail volumes in its three largest single markets of Germany, the U.S. and China, among other places.
BMW Group sales in China are particularly encouraging. From January to the end of March a total of 80,014 vehicles were delivered, an increase of 37% compared with the same period last year.
Asia, particularly the Chinese automobile market, is one of the most important for BMW. That’s why we are running a joint venture plant in Shenyang, where more than 300 engineers are already working.
BMW has also recently opened a design studio in Shanghai to contribute design expertise and innovative ideas and also offer strategic design advice to external clients in China. At the same location BMW will open the Connected Drive Lab to develop functions for infotainment, convenience, and safety, especially for our Chinese customers.
Here in Thailand BMW Group has set another milestone by achieving the highest sales since we came here in 1997, with 4,243 vehicles in total – 3,858 for BMW and 385 for MINI. For BMW, the achievement of 3,858 vehicles in 2011 represented a growth of 28% when compared to the previous year, another all-time first quarter high.
The good news is that in the first quarter of 2012 the sales of BMW cars increased by a staggering 48% from the same period last year, from 827 to 1,227 vehicles. Sales of the MINI totaled 100, a 14% increase, and 79 BMW Motorrads were sold, a 114% increase.
A major part of our success in Thailand and worldwide was contributed by sales of the BMW 5 Series, which grew to nearly 50% of the total BMW volume in 2011. There are now eight model variations. This comprises four petrol models, 520i, 528i, 528i Sport, 520i Touring; three diesel models, 520d, 525d, 520d Touring; and one full-hybrid, BMW ActiveHybrid 5, which has recently been introduced in Thailand.
In our BMW 5 Series, the new four-cylinder engines with BMW TwinPower Turbo technology add further talent to the line-up of petrol and diesel powerplants.
In which countries are BMWs assembled?
Our cars are manufactured at 13 locations worldwide. Principal among the production and assembly facilities are the factories in Dingolfing, Leipzig, Munich, and Regensburg in Germany, followed by factories in Rosslyn, South Africa and Spartanburg, United States, along with the joint venture in Shenyang, China.
The BMW Group also operates “completely knocked down (CKD) factories, where vehicles are assembled from imported and locally produced components. The CKD factories, which are owned and operated by the BMW Group, are in Chennai, India and here in Thailand at Rayong. Others operated in cooperation with external partners are in Jakarta, Indonesia; Cairo, Egypt; Kaliningrad, Russia; and Kulim, Malaysia.
As for MINI, the heart of production is in the United Kingdom, consisting of factories in Oxford, Hams Hall and Swindon. The pressings and body components are made in Swindon, and delivered to the Oxford assembly facility on a just-in-time basis. The engines, assembled in Hams Hall, also arrive at the production line immediately before they are needed. The MINI Countryman is built at another location in Graz, Austria.
Tell us about the BMW factory in Rayong.
BMW Manufacturing Thailand is based in the Amata Industrial Estate in Rayong Province. The plant began operations in April 2000, with direct investment from BMW Group AG of
1.8 billion baht. The facility has an area of 75,000 square meters. BMW Manufacturing Thailand is one of the most efficient and flexible assembly plants in the world, which is a key to our success here.
Since its commencement in 2000, BMW Manufacturing Thailand has played a significant role in enhancing the competitiveness of BMW in the Thai market. The plant assembles BMW’s wide product range, with five model series (3 Series, 5 Series, 7 Series, X1 and X3), and a total of 22 model variants. The plant is ready to integrate further models on the shop-floor.
BMW Manufacturing Thailand also provides technological support to other BMW manufacturers in the ASEAN region, such as launch support, staff training, quality assurance, as well as purchasing and supplier development.
Are you satisfied with BMW and MINI dealers in Thailand?
Our customer satisfaction will always be the first priority, but when our customers are satisfied, then we have to do more for them in the future.
In this regard, we will always plan our dealer network on a long-term basis in order to ensure that we have adequate facilities to support our future volume growth. This is vital for our business since the investment is not small, and it takes time to develop not only the “hardware” in terms of land selection, planning and construction. We have to also prepare the “software” in terms of staff competencies.
Does the “grey market” affect your business?
Strong brand recognition will always lead to arbitrage opportunities. However, the mainstream of our BMW and MINI customers still go for authorized dealers – for the services and re-sale value in the future. BMW and MINI brands have proven success in the Thai market, which interestingly leads to grey importers who come in to take advantage of the situation and customers.
However, service and “peace-of-mind” when it comes to maintenance are top priorities for customers making their buying decisions. That’s why BMW offers a service inclusive warranty for five years or 100,000 km, and MINI for three years or 50,000 km. Vehicles with proven records of excellent maintenance will, of course, gain better resale value.
What about BMW motorcycles in Thailand? How big is the market?
The market for big bikes of over 500cc has grown massively over the past few years. We have had a very successful start in the first three months of 2012 with 114% growth year-on-year, to close the first quarter with 79 BMW motorcycles sold. We have recently introduced the new exciting BMW motorrad to the Thai Market, i.e. the K 1600 GT, S 1000 RR, and two maxi-scooters, C600 Sport and C650 GT. All three received tremendous interest at the Bangkok International Motor Show.
Why are so many powerful cars made when countries like Thailand impose relatively low speed limits?
Speed limits are enforced because of safety concerns. In the automotive world, all components are developed not only to bring out the best driving performance, but also for safety concerns. We have developed technologies to ensure that our drivers have the best features to assist them in any driving conditions and at any driving speed necessary – head-up display, night vision, Dynamic Stability Control (DSC), adaptive headlights, etc.
How will engines evolve in the future?
Vehicles with conventional petrol and diesel engines are being continually improved with the long term aim of bringing about emission-free transportation. Innovations such as Brake Energy Regeneration and BMW TwinPower Turbo technology help reduce fuel consumption and emissions, while improving performance and driving enjoyment.
BMW now offers the first hybrid-drive production vehicles, which deliver savings of up to 20%.
In 2011, a new type of dynamic vehicle hit the streets – the fully electric BMW ActiveE. It made its debut as part of a limited production run and small pilot project. With room for four people and a 200-litre luggage space, it points the way to the emission-free transport of the future.
BMW is also carrying out research into alternative fuel sources such as hydrogen. In 2006, we unveiled the first hydrogen-powered luxury saloon for everyday use.
What are the future trends for cars in terms of size, engines and fuel?
The aim of further reducing fuel consumption and CO2 emissions in motor vehicles has led to a new trend referred to as “engine downsizing” by industry insiders. This means going away from large-capacity naturally-aspirated engines towards smaller-sized turbo units.
BMW has gone a further step in its turbocharger development, using BMW TwinPower Turbo technology. This allows not only for higher outputs, increased torque at lower engine speeds and better fuel economy, but these engines are also noticeably more responsive compared to conventional turbo units.
If we were to compare technology over the past two-three decades, we could only achieve more than 200hp from the larger engines, such as the 3.4 litre
6-cylinder BMW 535i, which produced 208 hp at 5,700 rpm. Today, 218 hp at 5,000-6,500 rpm is standard performance for the 2.0 litre, 4-cylinder engine with BMW TwinPower Turbo technology.
The launch of the new BMW ActiveHybrid 5 recently took place at the Bangkok International Motor Show in 2012, giving our strongest-selling 5 Series an attractive hybrid variant in its lineup.
Our future is diverse. There is no such thing as “either, or.” For BMW, the future is about “as well as.”
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