Auto Bavaria Porter Five Forces

Introduction

Bayerische Motoren Werke (BMW) is a German company that manufactures luxurious vehicles based in Munich. BMW Malaysia Sdn. Bhd. is the Malaysian coalition to the parent company in Germany importing these high performance vehicles into the Malaysian market.

Auto Bavaria, a subsidiary of the Sime Darby Group is one of the appointed authorized dealers for BMW, MINI and Mottorad. Established in 1988, Auto Bavaria is the largest retail and service organization that has eight branches and seven service centers located across Malaysia at Glenmarie, Segambut, Sungai Besi, Penang, Kuantan, Johor Bahru and Kuching while the Bukit Bintang branch is the only official BMW, MINI and Motorrad showroom in the country. Auto Bavaria’s range of products include the BMW one series, three series, five series, six series, seven series, X3, X5, Z4, M series and Mini Cooper all ranging from RM179 000 to RM 948 000 (New Sunday Times 25 may 2008). Every Auto Bavaria branch is staffed with passionate professionals dedicated to providing world-class sales and aftersales service as Auto Bavaria is committed to making their customer’s satisfaction their priority.

Auto Bavaria, a division of Tractors Malaysia (1982) Sdn Bhd and a member of the Sime Darby group, was established in 1988 and was appointed the BMW importer for Malaysia in the same year.

In order to widen our coverage and reach out to BMW owners, Auto Bavaria's network also includes five independent dealers. They are Cartrade in Kuala Lumpur and Ipoh, Seong Hoe in Melaka, Ang Trading in Batu Pahat, Wanija Industries in Seremban and Premier Motors in Labuan.

At our Glenmarie headquarters, a distinctively modern and purpose-built three-storey building house our main showroom, administrative office and the largest BMW service centre in Malaysia.

Here, as in each and every Auto Bavaria showroom across Malaysia, you can view the wide range of BMW cars, motorcycles and accessories in comfortable surroundings. Our experienced and knowledgeable sales personnel are never too far away, ready to provide assistance upon request. The aim is to provide every visitor a memorable BMW Experience.

As a responsible car importer and distributor, Auto Bavaria places great care in ensuring that BMW owners in Malaysia enjoy some of the best after-sales support in the industry. Our Service Centres are staffed with highly trained technicians whose main task is to help keep your BMW in tip-top condition.

Our excellent relationship with BMW AG and BMW Asia also ensures the constant presence of engineers from Germany to supervise and train the local staff as well as to service your BMW.

Auto Bavaria's customer-centric approach means that BMW owners in Malaysia do not just own some of the best cars in the world, but also experience the unique BMW Lifestyle through a host of value-added programmes all year round.

An excellent example is Auto Bavaria's investment in bringing the renowned BMW Driver Training programme for the benefit of our Malaysian customers. It has proven to be hugely successful as we help BMW owners acquire the necessary skills to enjoy their Ultimate Driving Machines in a safe and responsible manner.

Auto Bavaria now controls of the BMW car market. It was reported that, its sales was 2300 units in 2007 an increase from 1800 units in 2006 with growth coming from the sales of new models in the 5 series and 7 series. The increasing number of units sold annually shows that more Malaysians are purchasing BMW from Auto Bavaria.

SOCIO-CULTURAL

Automotive experts at ACNielsen developed an “Aspiration Index” (AI) to further measure the relationship between current ownership levels and future intentions to purchase a vehicle. As a result, significant variations were observed between markets and types of vehicles aspired to. A high AI (more than 60%) reflects lower level of existing ownership and higher level of potential to purchase a vehicle where else, a low AI (less than 30%) indicates higher levels of existing ownership and lower potential to purchase a vehicle. Malaysia’s AI is between 30%-60% which is the medium level. This shows Malaysia’s future car industry is expected to be lucrative and expansionary. Based on a interview with Mr. Dominic Xavier, Vice President of Sime Darby, Group Corporate Assurance , he said a person with an average income of RM10, 000-RM15, 000 only will be eligible to own a BMW car. The average income of a Malaysian (a degree holder with three years working experience) is around-RM5000 per month. The lowest BMW 1series car cost arount Rm170,000. Mr. Dominic Xavier also said that Auto Bavaria Sdn. Bhd has introduced unique financing schemes to attract more customers like a zero percent interest rate for its financing package.

ECONOMIC

Malaysia is going through inflation same as the year 1997 which maybe even hit harder than 1997. This time it will hit Asia even harder than before. To many factor that had indicate that Malaysia is going through inflation and recession is coming nearer such as fuel price has increases, shortage of rice and other price factor to increase. The forecasted Malaysia’s real GDP slightly reduced, but it would still depend on the RM9 to be carried out. The government did announce last month that Bank Negara will not borrow money for hedge funds, to avoid what happened in 1997. During this inflation level in Malaysia, the bank interest rates increases because contractionary monetary policy is used, thus less people will apply for car loan and this will of course effects Auto Bavaria Sdn.Bhd. It is because, to own an expensive BMW car, people tend to apply for loan, but if the interest rate is high then people will rather not consider of having a car. Besides that, during this inflation level the confidence on future economic is also low where else people tend to spend less and invest less especially on cars which will of course affect Auto Bavaria. It is because the sales of the car will reduce. Currently, the Malaysians are so busy to sustain themselves with cash in bank.

ENVIRONMENT

Mobility is a socially desirable component for Auto Bavaria Sdn. Bhd. For the development and well-being of a society, not only is mobility essential, but also the preservation of our environment. This conflict of interest is exacerbated by the problem of the finite nature of fossil fuels. The BMW group and Auto Bavaria Malaysia are facing up to these challenges. Their aim is to make pioneering contribution to ensure sustainable mobility,