Cars

German logistics firm building bridges to European auto markets

By Li Fangfang (China Daily)
Updated: 2010-06-10 11:17

BEIJING - German company BLG Logistics is actively seeking business opportunities in China as local automakers gear up to sell their cars in European markets.

A vehicle assembly line at Chery’s plant in Wuhu, Anhui province. Transnational logistics company BLG has helped Chery transport thousands of cars from China to Russia. [SAN ZI / FOR CHINA DAILY]

"It's a golden opportunity for Chinese automakers to enter the European market as the global financial crisis last year impacted Western country residents seriously, especially their car-buying budgets," said Manfred Kuhr, vice-chairman of BLG's executive board.

"European consumers began to shift their focus from premium branded luxury cars to less expensive, compact cars, a segment of Chinese branded cars remain competitive in, in terms of pricing."

According to Detthold Aden, the company's president and CEO, last year, the majority of the 1 million vehicles sold in Germany were smaller-sized economy cars from Japanese and South Korean companies.

BLG is actively contacting automakers including Great Wall, Chang'an, BYD and Huatai to provide logistics services in European markets.

BLG has already helped Chery transport thousands of cars from China to Russia, offloading at Bremerhaven harbor, where BLG's headquarters is located in northern Germany.

The 133-year-old company also helped BMW's Chinese joint venture partner, Brilliance, to be the first Chinese company to sell cars in Western European countries. However, fierce competition and Brilliance's Luxembourg-based dealership's shortage of capital, forced the Chinese automaker to quit the market recently.

"It's a pity for Brilliance, which failed in the first phase of entering mature Western markets," said Aden. "But we are pleased to see that the company has shifted their direction to conquer eastern European countries now."

Aden said it will be better for ambitious Chinese automakers to enter Eastern European countries first before trying to gain a foothold in Western Europe's highly competitive and saturated markets.

According to BLG, in 2019, vehicle sales in Western Europe are expected to grow by 35 percent over 2009, while Eastern Europe markets will surge 170 percent.

Chinese auto brands Chery, Great Wall and Geely, now have a small share of the Russian and Ukrainian markets.

"As Chinese carmakers now focus on Russia and Ukraine, BLG has also made a huge investment to expand its logistics network into Eastern Europe," said Kuhr.

Michael Buenning, managing director of BLG Logistics Shipping, suggested Chinese automakers first establish complete knock down (CKD) assembly plants overseas and consider setting up manufacturing facilities there when sales top 100,000 units.

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"We are now discussing with China's Geely Auto, which acquired Sweden's luxury brand Volvo earlier this year, to help the company establish an integrated logistics center in Ningbo, to collect and package its CKD parts sourced across the country and then transport them to its assembly plants in Eastern Europe and Africa," Buenning told China Daily.

Currently, BLG is assisting Daimler AG transport vehicle parts from its suppliers in Spain to the German automaker's plant in Fuzhou to produce light commercial vehicles such as the Vito and Viano models.

Last year, BLG transported over 3 million vehicles around the world, yet only 8,000 units originated in China. Shenzhen-based BYD said last week that it will set up its Europe headquarters in Germany soon, in preparation for sales of E6 electric cars there next year.