BMW Philippines Corp., in its 2008 financial report, said it had to sell inventory at a loss ahead of the closure of local operations.

The company’s net loss last year ballooned to P186.53 million from only P22.43 million in 2007. Meanwhile, sales of the leading luxury car brand inched up by only P15 million to P1.89 billion in 2008.

BMW Philippines decided to stop local operations last Dec. 19.

The company, a joint venture between BMW AG of Germany and local partner Asian Carmakers Corp., said it had terminated lease agreements and other major contracts effective Dec. 31.

It also paid P25.2 million in separation packages to its 34 employees.

Last September, BMW AG announced the dissolution of Philippine operations, citing the need to improve business efficiency worldwide. The car maker also shut down operations in Turkey and Taiwan, citing the same reason.

BMW Philippines has said the move would not affect customers.

Asian Carmakers’ operations will be monitored by BMW’s regional office in Singapore, which also oversees the dealerships in Vietnam, Brunei and Guam.

The local BMW dealership sold 621 units last year, down by almost a quarter from 805 units in 2007, industry data showed.

Asian Carmakers Chairman Jose Ch. Alvarez said last year that BMW’s sales would drop to 600 to 800 units this year due to the entry of Japanese luxury cars with the implementation of a bilateral free trade agreement between Japan and the Philippines.

Don Gil K. Carreon, Business World

In line with this BMW Philippines, owned 70 percent by the BMW Group and 30 percent by ACC, will be dissolved by December.

In an exclusive interview with The STAR, ACC chairman Jose Ch. “Pepito” Alvarez  said the BMW automobile business in the country will remain intact, but would now revert back to the control of ACC which had previously controlled the franchise.“It’s the same. Before, they wanted to take control so I let them. Now, because of their restructuring, they’ve decided to return control back to us,” Alvarez explained.

Alvarez said ACC is expanding its BMW business with a P250-million investment for an automotive technical institute that would train automotive service technicians for the Middle East, China, North Asia, Korea and Japan.
“It will be even better,” Alvarez stressed.

He said the BMW Group will continue to provide technical support while marketing and sales will be taken over by ACC.

“All the German technicians will remain while we will also train more service technicians,” Alvarez said.

The institute, Alvarez said, hopes to train and graduate 25 to 50 technicians every three months and send them mostly to the Middle East and China.

According to Alvarez, BMW continues to be the No. 1 in sales in the luxury car segment.

So far, this year, Alvarez said, BMW has sold 865 units with the total for the year expected to reach almost 900 units. However, the prospects for next year are not as good, with sales going down to between 600 and 800 units, he said.

This is due to the forthcoming election and to the effectivity of the Japan-Philippines Economic Partnership Agreement (JPEPA) which would give Japanese cars a strong price advantage over their European counterparts.

In a press statement, BMW Asia managing director Roland Krueger, who oversees the BMW business in the Philippines, said that BMW Philippines would be “restructured.”

By Jan. 1 next year, ACC will take over the importation of BMW automobiles and “further development of the BMW automobile business in the Philippines.”

According to Krueger, “the restructuring is a logical step in view of the objective to increase business efficiency worldwide.”

“Our top priority is to ensure the best sales and service standards to our customers in the Philippines and this priority will remain unchanged,” he said.

By Marianne V. Go , Philippine Star