The BMW brand has been in Malaysia at least since the 1960s when its early models were imported by Asia Motors (which also represented Mazda and Peugeot). In the 1970s, Continental Motors took over sales of the brand and imported models like the CS, 02 and 2500. The German brand had a moderate following although it was overshadowed by the one with The Star which had come into the market much earlier.
Towards the end of the 1970s, BMW Concessionaires was established and took over from Continental Motors (which continued to have a share in the business). The new distributor was a subsidiary of Sarawak Motor Industries (SMI), which was owned by the Sarawak Economic Development Corporation. SMI had a big vehicle assembly factory in the Pending Estate in Kuching and like all factory owners, it wanted to maximise the use of the available capacity.
Local assembly the way to grow
So in 1979, which was 4 years after the first 3-Series (E21) had been launched, BMW AG was approached with a proposal to assemble the model locally. Local assembly offered a significant advantage which would help grow volumes – the cars would be subject to a low tax rate, which meant that they could be sold at a lower and more attractive price. Also, using the local assembly approach (or CKD – completely knocked-down, in industry language) meant that more cars could be sent over in one shipment as they took up less space when in disassembled form.
Although, at that point in time, SMI’s production was mainly the Toyota Land Cruiser and commercial vehicles, the representatives from BMW must have been satisfied with the facilities. Besides, it wasn’t easy to get local assembly started as the factory needed to have a manufacturing licence and SMI had one for doing passenger cars. So in the middle of 1979, an agreement was signed to assemble in Malaysia, starting with the 3-Series.
However, it would only be in 1981 when the first locally-assembled 3-Series rolled out and this was only the 320 2-door variant with a 2-litre 6-cylinder engine. It would later be followed in 1984 by a 4-door variant when the E30 generation was introduced.
As mentioned earlier, local assembly meant reduced tax being imposed and where the imported 320 cost around RM47,460, the one assembled in Malaysia was priced at RM39,377 or 18% lower. After the 3-Series, SMI also began assembling the 5-Series (E28) with the last batch having the extended ‘US bumpers’ that were criticised as eyesores.
Assembly moved to Shah Alam
Around the time that version of the 5-Series was completed (1988), BMW decided to appoint Tractors Malaysia as its distributor, with the brand handled by a division known as Auto Bavaria. Assembly on the German cars was transferred to AMI in Shah Alam, Selangor, a plant which became a Sime Darby subsidiary after being acquired from Wearne Brothers in the mid-1980s.
Some 20 years later, it became a jointly-owned facility with Ford but in 2007, the American carmaker decided to pull out of Malaysia so the plant had to cease operations as a decision was made to sell it off (it is now owned by the Tan Chong Group).
This posed a problem for BMW but they were able to find an alternative facility in Kulim, Kedah, at the Inokom factory, owned by Sime Darby. Assembly was transferred in 2008 and since then, BMW vehicles assembled in Malaysia have originated from there, with plans in the near future for some to also be exported to neighbouring countries. Certain BMW engines are also assembled at an adjacent facility.