ROSSLYN'S 3 SERIES CONTRACT 'THE RIGHT DECISON'

February 8, 2010
By Roy Cokayne

BMW has given the future viability of its operations and investments in South Africa the thumbs up and expressed confidence about the stability of the business and political environment in the country.

Chief executive Norbert Reithofer said the company was "100 percent" certain it had made the right decision to award BMW SA a contract for the production of the successor to the current 3 Series and to invest R2.2-billion in its Rosslyn plant.

A scheduled meeting between Reithofer and president Jacob Zuma on Friday was cancelled but meetings took place with finance minister Pravin Gordhan and trade and industry minister Rob Davies.

Reithofer said: "I had a very good feeling following the meetings in regard to the stability of business conditions and the political environment in the country."

Reithofer told Gordhan and Davies about the importance of the automotive production and development programme in bringing about stability in the business environment.

He said BMW SA exported cars from South Africa to various countries and he had told the ministers about the importance of the country's continued good relationship with the US, for example, from a trade perspective because it helped BMW's export programme.

According to Reithofer the future regulations relating to CO2 vehicle emissions was also discussed.

Reithofer said BMW's business model in South Africa, involving local production and exports plus car imports, was viable and in no danger because of the stable business environment created by the APDP.

This stability would enable BMW to develop in other markets in southern Africa, which would probably take another decade to become a growth market, he said.

The most important factors that contributed towards the decision to award the 3 Series contract to BMW SA and make further investments in South Africa were the size of the domestic market and its exports from South Africa, he added, noting that BMW sold 18 000 cars in 2009 in the South African domestic market despite the premium car market declining by 24 percent.

The target was to sell 20 000 units a year in South Africa, which made it a very good domestic market for BMW, while two-thirds of the company's production was exported.

He said BMW had in February reported that it would be able to close its 2009 financial year with a profit despite the global slump in new vehicles sales caused by the global financial crisis.

Reithofer added: "From a worldwide business viewpoint, we are not yet through the financial crisis and have to see how the year 2010 develops. But with our new products and favourable product lifecycle during 2010, 2011 and 2012, we are quite optimistic."

BMW will launch the new X1 and 5 Series in 2010, both of which will be available in South Africa.

Reithofer said BMW was optimistic and forecasting sales volume growth in 2010, compared with 2000, because of its new products, adding that it expected to achieve single rather than double-digit volume growth in 2010, "but more than one or 2 percent".