They say all good things must come to an end, and for BMW Philippines, that will be on December 31, 2008. Happy New Year, Mercedes, Audi, Jaguar and Volvo.
In a shock announcement last week, the German giant decided to hand over full control back to the Asian Car Makers Corporation (ACC), which is headed up by the Alvarez group, who also happen to have control over Kia.
ACC, the original importer and assembler of BMW cars in the Philippines, are well-placed to take over local operations, considering their history with the Bavarian brand and the fact that they currently own and operate Prestige Cars in Makati, as well as the massive Autohaus dealership in Libis.
ACC has been a major player in the automotive industry, successfully importing well-known brands over the years like Mazda, Daihatsu, Subaru and of course BMW and Kia. But while the qualifications of ACC are not in question, their position as an importer and dealer has raised some concerns with other BMW dealers who fear that there may be a conflict of interest.
As of today, BMW currently has six authorized dealers, spanning from Alabang, Makati, Quezon City, Pampanga and Cebu. While there are certainly no formal protests, some have expressed their uncertainty, although they admitted to being willing to give ACC the benefit of the doubt and all work towards the same goal.
ACC, for their part, have always held the exclusive importation of the BMW brand, even during the time of BMW Philippines tenure, so the shift shock shouldn’t be as dramatic as BMW’s first generation SMG gearboxes.
In a private teleconference with The STAR, BMW Asia’s managing director, Roland Krueger, gave his full endorsement to ACC and assured us that the transition would be seamless for current and future BMW owners. He explained, in great detail, BMW’s new global efficiency platform, which is designed to streamline operations around the world, but promised that BMW remain totally committed to the brand here in the Philippines despite overseeing everything from the regional office in Singapore.
The announcement comes at a crucial time, though, considering that the Toyota Motor Philippines backed Lexus brand has already broken ground in Global City in Taguig and have scheduled their soft opening at the end of the year.
At its peak, BMW enjoyed more than 65% of the luxury car market. Since the introduction of the successful restructuring of Mercedes Benz, however, as well as the resurgence of Audi, Porsche and the continuing growth of Volvo as well as the seductive lure of Jaguar, BMW has steadied at around 50%.
BMW Philippines set up shop back in 2001 and currently employs 36 people directly, all of whom have been given redundancy packages as well as employment contracts with ACC should they decide to join the Alvarez group. The general consensus among the staff is that BMW have been more than fair with their exit strategy, although the common thread is still one of natural disappointment and shock.
But as sudden as the announcement may have been, there really is no change in the relationship between BMW and the customer, and nor should there be, we have been told. The end user will still be dealing with his sales manager and service advisor, and the absence of a local BMW office with an expatriate president will not be felt by Mr. & Mrs. buyer. Warranties will continue to be honored and after sales support will continue as it always has.
The Philippines was in a fairly unique situation of being one of very few markets anyway to have a subsidiary as well as an importer, so the restructuring seemed inevitable to many.
In fact, there may even be more benefit to the customer under this new structure, as the streamlining should bring costs down and could allow more incentives from Munich. There are pros and cons with being an importer or subsidiary. These include different margins and of course regional support for marketing and PR budgets. The danger with having both is that rather than getting the best of both worlds, you can usually end up getting the short end of both sticks, as the head office normally classifies you depending on what is convenient to them at the time.
This new take over simply comes down to building a better business model. Taking the training wheels off the bike, so to speak. BMW has spent the last 8 years building a brand locally and has done a terrific job of it. This will not evaporate overnight because of one teleconference. The extremely talented and hard working men and women who report to the Philam tower in Makati now hand over a very well cared for product back to the original importers and are entrusting them with their precious investment.
And at the end of the road, if they have the confidence to do so, I can’t see why we cannot.
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