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BMW shifts up a gear to boost Africa sales

updated 8:04 AM EST, Thu March 1, 2012
BMW says it sells one out of three premium cars in South Africa.
BMW says it sells one out of three premium cars in South Africa.
  • Bodo Donauer is the managing director of BMW South Africa
  • He speaks about the challenges of operating a major export business out of South Africa
  • Donauer gives his assessment over the impact of the eurozone crisis on the sector.

(CNN) -- Car giant BMW is shifting up a gear in its efforts to tap Africa's emerging middle class.

Bodo Donauer, managing director of BMW South Africa, said the auto manufacturer sells one out of three premium cars in the country. He now wants the company to replicate the successful South African model in other parts of the continent.

"We clearly see that there is a growing middle class coming through in Africa and that there is a lot of interest in development and we assume that the middle class as we have seen it in South Africa is growing and there is purchasing power and there is a demand for our cars as well," he told CNN's Robyn Curnow.

Last week, BMW unveiled plans to increase the production capacity at its Pretoria-based Rosslyn plant, the company's first production facility outside Germany, built in 1973. The move is expected to enable BMW to double its exports from the country -- Donauer says that 80% of the cars produced at the plant are exported to countries across the world.

An edited version of the interview follows.

BMW proud of South African production

CNN: What is it about South Africa that you find good and what are the challenges of working in this country?

Bodo Donauer: We are proud to have a plant here in South Africa which is a member of the BMW Group production network and we are proud that we are able to deliver the same quality.

Certainly there are always challenges, there are challenges all around the whole world and if you talk in South Africa about challenges, it's a skills issue, it's the supplier base, it's education of the people, it's logistics and everything but so far we were able to deal with this and to overcome this and we have a successful future ahead as we are planning to double the production volume in this plant.

CNN: Logistics -- getting the cars out -- how difficult is it, particularly with a port like Durban for example?

See also: Long delays at Africa's busiest port

BD: It's a challenge, especially if you're talking about the Durban port, if you have the lowest efficiency and the highest prices for your port operation it's not a good position to be in. So, South Africa needs to change this and there have been measures taken at least to talk about and to bring it forward.

We need efficient ports but we just do not need Durban alone -- I would say we need in sub-Saharan Africa sufficient ports, we need to have one in Mozambique, maybe in Angola and we need to have an infrastructure which links these ports to each other -- it's all about proper infrastructure in order to get production volumes which are increasing out of the country to our customers.

Read also: IMF chief calls for job creation in Africa

CNN: Do you think that's a huge failure of South Africa in particular?

BD: It is at least a weakness which we definitely have but in favor of South Africa's weakness [is that it] has been mentioned... (that) certain improvements will be done and I trust that this will come through.

We try to use the model which we have used in South Africa to increase our footprint.
Bodo Donauer, MD, BMW SA

CNN: From your point of view, has this been one of the things that has kept you awake at night, how to get the cars of this country?

BD: Yes, we have fantastic cars, we produce them with the right quality and we should have a very smooth process in a combination between transit and the port operation to get them out as quickly as possible and this is what we're working for.

CNN: How has the euro crisis impacted the BMW Group globally?

BD: We have not been affected directly, it's more a financial crisis than an industrial crisis. It's very important that we have a successful euro and from a German point of view -- talking for a German-based company with a lot of international operations -- it's very important, as we are a big exporter, to have a common currency.

Read also: Underwater cables bring faster internet to West Africa

CNN: The cars built in BMW's South African plant are exported across the world.

BD: The majority of the cars, 80 per cent to be exact, is exported around the world -- main markets are the NAFTA states, Japan, Australia, Korea, Hong Kong, all these kind of countries.

CNN: And Africa?

BD: We sell through the whole African continent, I think 33,000 or 35,000 cars, the majority of this certainly in South Africa at the moment.

In South Africa we are clearly the leader in the premium car segment, one out of three premium cars is a BMW. Yes, it's different if we go north in Africa because we are not selling so many cars over there -- we have a huge market in Egypt and we have importers who sell our cars through Africa, but what we do now (is) we try to use the model which we have used in South Africa to increase our footprint.

CNN: Why are you taking this decision now?

BD: It's that we clearly see that there is a growing middle class coming through in Africa and that there is a lot of interest in development and we assume that the middle class as we have seen it in South Africa is growing and there is purchasing power and there is a demand for our cars as well.

Teo Kermeliotis contributed to this report

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