BRAZIL: BMW eyes strong growth, mulls local assembly
BMW expects to maintain double-digit sales growth this year in Brazil where it may build an assembly plant, a senior executive said in an interview.
Sales of BMW's sedans, sport utility vehicles and hatchback models in Latin America's largest economy will likely rise 25% to about 10,000 units, Jorg Henning Dornbusch, who heads the German carmaker's Brazilian unit, told Reuters. The number does not include sales of motorcycles.
The introduction of new models is allowing BMW, whose sales are expanding five times faster than the national average, to boost its grip in Brazil's burgeoning luxury car market. BMW controls about a third of that market, which sells about 35,000 units a year.
In coming years, "I want us to grow at least twice as fast as the national average," Dornbusch said.
Luxury brands are prospering in a nation where booming trade and business activity sparked a surge in the number of millionaires to about 130,000 last year. Brazil's economy last year expanded at its fastest pace in 24 years.
This year, BMW launched four models in Brazil, including a hybrid. Sales growth will likely slow from about 50% in 2009, as a result of government curbs on new credit, Dornbusch noted.
The carmaker's price tag for the models it sells in Brazil is currently between BR$70,000, or an equivalent US$44,000, and BR$540,000, or about US$341,000. Brazil is considered one of the priciest car markets in the world, as a result of policies aimed at protecting locally-based carmakers from imports.
BMW is currently studying plans to build a semi-knocked down assembliy plant in the country, which also be the company's first in South America. SKD plants - which assemble painted and trimmed bodies onto mechanicals with minimal local content like tyres and batteries - require less investment and scale than a CKD factory with welding and paint lines.
BMW assembles cars in other high-tariff markets - including China, India and South Africa - as well as the US.
Dornbusch noted that all options are under consideration at this point.
"There are aspirations of Brazil's population to move to a higher status and consume other types of goods ... and that is why BMW is analysing ways to be present in Brazil," he noted.
BMW already produces motorcycles in Brazil, in a joint venture with Brazilian assembler Dafra, in the Amazon-based free trade zone of Manaus.
Three of every four vehicles that BMW sells in Brazil are priced between BR$97,000 reais and BR$180,000 reais, he added.