Sime Darby Motors Expands to Vietnam with Acquisition of BMW and MINI Distributor

Sime Darby Motors has signed agreements to take over the existing distributor of BMW and MINI in Vietnam, a new market for the automotive group which already operates in 8 countries and territories in the region.

“As a major regional automotive group, we have been exploring expansion opportunities in new markets and Vietnam has proven to be an exciting market for us with the burgeoning affluence of its population. The luxury car market is growing and this deal gives us an immediate foothold in the Vietnamese automotive market,” said Dato’ Lawrence Lee, Managing Director of Sime Darby Motors.

Sime Darby Motors’ subsidiary, Sime Singapore Ltd, is buying 89.15 per cent of Europe Automobiles Corp Holdings Pte Ltd (EACH) for RM93.73 million (equivalent to USD$29.59 million) and 16.02 per cent of Europe Automobiles Corp (EAC) for RM20.22 million (equivalent to 134,798.7 million Vietnamese Dong). EACH holds 82.98 per cent of EAC, which holds the distribution rights in Vietnam.

The acquisitions, which are expected to be completed by 8 November 2013, are subject to certain conditions which include, among others, the consent of BMW Asia Pte Ltd and BMW AG.

A popular investment destination in Southeast Asia, Vietnam’s economy grew 5.2 per cent in 2012 and is forecast to expand 5.3 per cent this year, according to the International Monetary Fund. Although the total industry volume fell 28 per cent to about 79,000 units in 2012, the Vietnamese government has put in place initiatives to nurse the automotive market back to health.

“Vietnam holds promise in the long term. Its car to population ratio is still low at 18/1000 compared with Southeast Asia’s average of 80-150/1000. In addition, demand for imported vehicles is expected to increase with the upcoming tariff revisions under the Asean Free Trade Area agreement,” Lee said.

Sime Darby Motors is one of the largest BMW dealer groups in the world, with a network that spans countries like China, Thailand, Singapore and Malaysia. The Division is also the third biggest profit contributor to the Sime Darby Group for the year ended 30 June, 2013, after the Plantation and Industrial Divisions.

Sime Darby Motors reported a profit before interest and tax of RM711.4 million for 2013, a 1 per cent improvement from a year earlier amidst challenging business conditions.