BMW-brand auto parts are among the hottest items on the market, with new car makers including Volkswagen and Daimler and other automakers looking to capitalize on the surging popularity of the car parts market.
“It’s just an amazing story,” said John Lissauer, an analyst at Kantar Worldpanel ComTech.
“We see the emergence of a new business model, where the consumer really wants to know what the manufacturer is up to, and that’s what BMW is doing with the new cars.
They are doing it by providing an inventory of products that are in demand.”
For instance, BMW has just released its new line of M3 and M5 sedan, which include an engine swap that makes them available in the United States.
And Daimlers is looking to make a name for itself in Canada with the launch of a line of premium and high-performance SUVs.
“The brand recognition that’s generated by this brand in the US is a huge plus,” said Jeffery Weltman, an auto analyst with Cowen & Co. “It’s the new market for premium vehicles.”
Auto makers in Canada also are making big bets on emerging markets.
BMW and DHL are looking to take advantage of rising demand in Asia by adding a car-sharing service to their existing car-leasing network in Asia.
And Volvo is looking for a global foothold in Asia to take on the global competition from General Motors and Ford.
“We’re seeing a tremendous surge in demand,” said Lissauers colleague Dan Poyntz, an automotive analyst with BMO Capital Markets.
“There are some companies in the world that have a very strong brand recognition.
We’re seeing more and more companies that are building brands from scratch.”
In China, the country with the most auto parts demand, companies like Daimles are using the opportunity to increase their market share in the country.
“If you look at the number of cars sold in China, that’s actually up in 2016 from 2016, which is a pretty significant increase,” said Mark Ruh, an associate professor at the University of Southern California’s Luskin School of Business.
Daimler is a major supplier of parts in China and is looking at expanding its manufacturing in the Chinese market to meet the rising demand.
The company recently opened a new manufacturing plant in Wuhan, the largest city in China.DHL recently invested $150 million in a factory in the northeastern province of Hubei, making parts for Mercedes-Benz vehicles.
It is also looking to expand its manufacturing operations in India and Vietnam.
“India is a really fast-growing market, and they are also seeing some of the growth that they’re seeing in the automotive industry,” said Ruh.
“So we think the opportunity is there to expand in India.”
Other major automakers are also expanding their operations in Asia, with Volkswagen recently announcing a partnership with a Chinese manufacturer to build a new electric vehicle, the XE.
BMW recently announced a partnership to build its first luxury electric car, the M3.
“There’s a huge amount of growth coming out of China and the rest of Asia, so we’re looking to bring a lot of those companies into the market,” said Weltmann.
“What BMW is able to do is leverage the strength of their brand and their reputation.”
The popularity of luxury car parts is driving the rise of car makers in Asia as well.
“A lot of companies are coming out with premium vehicles,” said Poynton.
“They are looking for ways to differentiate their brand.”
As automakers continue to expand their business, there is one area where they are taking a hit: the cost of doing business in Canada.
“Canada has a lot to offer in terms of a brand,” said Marc Pimentel, an independent financial analyst at Poyonts Investment Bank.
“But the big reason for the cost has been the way we have our business.
We have to pay the same as everyone else.””
There are very few opportunities to build out a company in Canada, at least in the traditional sense,” said Tim Jernigan, an executive vice president with GM.
“As a result, a lot more of our business is done outside of Canada.”
For example, GM is looking into investing in a Canadian factory to make electric vehicles.
And Toyota, which has more than 70 plants worldwide, is expanding its electric vehicle program in Asia with a new factory in China in partnership with China National Offices of Automotive.