BMW launches Indonesian-made sedans in luxury push

Wed Nov 30, 2016 9:17am EST
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By Eveline Danubrata and Cindy Silviana

JAKARTA (Reuters) - German automaker BMW (BMWG.DE: Quote) on Wednesday launched its 7 series sedans in Indonesia that will be assembled in the country as it seeks to tap into the long-term demand for luxury vehicles in Southeast Asia's biggest economy.

Other luxury car companies such as Daimler AG's Mercedes-Benz (DAIGn.DE: Quote) are also increasingly shifting part of their production to the country of 250 million people to reduce costs and distribute their vehicles more quickly to consumers.

"We are very positive about the future of Indonesia and therefore we also see an increased potential in the luxury market," Axel Pannes, managing director of BMW Group Asia, told Reuters on the sidelines of a media launch in Jakarta.

The German company has invested more than 210 billion rupiah ($15.5 million) over the last five years to assemble a greater number of car models in Indonesia, the 7 series being the latest addition to its local line-up.

The group sold a total of 3,638 vehicles in Indonesia last year, up 5.7 percent from a year earlier. BMW executives declined to give sales projections for this year or for 2017.

Global carmakers would benefit from lower import tariffs for certain components if they were to set up local assembly plants, said Jongkie Sugiarto, co-chairman of the Association of Indonesia Automotive Industries.

The move would also be positive for Indonesia as it brings investment into the country and generates employment, he added.

The Indonesian government is offering incentives for foreign companies to build cars domestically, said I Gusti Putu Suryawirawan, director-general for metal, machines, transport equipments and electronics at the industry ministry.   Continued...

Workers put together doors for a locally assembled new BMW 7 Series on the production line at a Gaya Motor assembly plant in Jakarta, Indonesia November 30, 2016.   REUTERS/Darren Whiteside