BMW has opened its first solely-owned motorcycle plant outside German borders, in Manaus, Brazil.
BMW has been piecing bikes together from bits sourced out-of-country for ages, of course; currently, the best example is the F700/800 line; that parallel twin engine comes courtesy of Rotax. Before that, the innovative G450X was made with parts out of Taiwan (now, much of that engine lives on in the CCM GP450).
But this plant won’t just be producing parts to be fed back to Germany — it will manufacture bikes for local markets, including the F700 and F800 lines, as well as bikes from the S1000 line. The plant is starting with the lowest-spec bikes, the F700 models, but plans sound aggressive — production goal for the first year is 10,000 motorcycles, from 175 employees. This sounds as if there must be a lot of robotic help involved, as that’s a lot of work to be accomplished by less than 200 people. If demand in the South American market rises, BMW says production goals could change, too.
The plant cost 10.5 million euros, and was built over nine months. Along with the plant and its employees, BMW has also developed relationships with more than 45 local suppliers.
While some of the faithful may decry the move away from building every BMW bike in Germany, the reality is, BMW is just following a trend. Ducati, Triumph, and KTM all build motorcycles in developing countries, and BMW is just following a well-worn path. Except, they’ve taken a diversion off the main route, and instead of building machines in Asia, they’re doing it in South America, at least for now. If this experiment works out, don’t be surprised to see more of these factories open in other countries where labour costs are low, but technical skills are high.
I understand to stay competitive, especially with bikes with lower margins, that this may be necessary, but at least BMW is keeping sales of Brazilian bikes to that region. Unlike Ducati & Triumph. Otherwise, it’s beginning to happen with premium car brands too – Audi with it’s Q5 being made in Mexico and Mercedes will start in 2018 with some models as well. At least with their lower end models.
Time will tell if it’ll effect brand perceptions.
And what’s wrong if they decide to ship them here? The worst that could happen is they can sell for a lower price, or at least maintain the current price longer.
To some I’m sure there’s nothing wrong, but to others (most I believe) who buy premium euro or US brands they’d prefer their bikes are built in the country that the brand is associated with. This is why so many of these brands have been slow to look outside their borders to find cheaper labor, especially for models for worldwide consumption, or only have their entry level machines built elsewhere – they know they’re playing with their trump card.
And in terms of expecting a better price – I can’t recall one such clear cut example, the savings simply go to boosting their margins. So after all’s said and done one still gets a higher priced bike that might be no better than the competition yet it’s now built next door.
http://www.cycleworld.com/2012/12/31/four-affordable-motorcycles-for-city-commuting-and-cross-country-adventure
But if they’re able to produce the product and maintain the level of quality, AND maintain a certain price point then the only downside is perception. People prefer one brand over another for more than just the perception of exclusivity or that their motorcycle is somehow exotic.
As for the company realizing improved profitability on a certain model, good. That’s why they exist and why they make these decisions. The theory goes that production gets moved to lower cost jurisdictions to free up higher cost production capacity that can be deployed towards higher value models/products.