With luxury cars roaring into Cambodia, the high-end automobile industry is on the rise. Writer Joanna Mayhew finds out more about the speedy trend from President of the Cambodia Automotive Industry Federation and BMW CEO Peter Brongers. Photography by Charles Fox.
What is the history of cars in Cambodia?
I’ve been coming to Cambodia for 20 years. In 1993, the country was incredibly poor. When you arrived at the airport, the mode of transport was a velo, or, when you were lucky, a motorcycle. The only cars were big cars from the United Nations – usually Land Cruisers because the roads were terrible. From that moment onwards, most cars Khmers with money were starting to buy were big four-wheel drives. There’s no country in the world that has as many big four-wheel drives. I think it was an inheritance of the UN. I moved here in 2009, and you didn’t see many new cars – almost everybody was buying second-hand. The big shift started five years ago, when official dealerships started to open, offering new cars but also new concepts, [such as] warranties.
What are the current trends?
The past 20 years, the main trend was from no cars at all under the Khmer Rouge and Vietnamese occupation to the big cars. Slowly, you get a trend from these cars to more mature cars. Most older government people prefer big Lexus 570s and Land Cruisers. But the younger, more educated businesspeople are starting to move away from the big four-wheel drives to the more practical, economic and elegant luxury cars. The total number of new cars imported in 2014 was 3,500, and of that the luxury segment is around one third. The biggest selling luxury car is Lexus, then Land Rover, then BMW.
When did BMW and other luxury brands enter?
The first luxury brand was Mercedes Benz. They were here since the 1960s, but when the Khmer Rouge came, they left. A couple of years ago, they restarted their dealership. [BMW] opened in 2013. The Royal Group owns Royal Cambodia Limousines, and in 2012 we provided transport for the ASEAN conference. We bought almost 100 BMWs, and BMW asked us to [open] a dealership. We started from zero, and last year sold 200 cars. We did better than the others; you can see it on the road.
What do luxury cars say for the country’s progress?
Cambodia is a poor country. Many people ask, “Do you think it’s really appropriate to sell an expensive car like that when some people make $90?” But you cannot argue like that. We have a luxury product; we cater to a certain percentage of the market. Cambodia’s economy is growing, and it’s growing faster than most other countries in the world. It is a poor country now, but it will not stay poor forever. Thailand’s relatively rich; Vietnam is doing very well. Cambodia is right in the middle, and it can only go one way – up. As car dealers, we’re feeling an increasing demand.
Are there challenges to selling luxury cars here?
The main challenge is the size of the market. It’s fast growing but still small.
Our potential target is 10,000 people. It is also a challenge for us to get people into the smaller cars. [Another is] the “grey” imports. We are officially importing cars—we pay our taxes; we are a 100 percent legit business. If you have a guy who has a hole in the wall and imports 50 cars, half of them he imports under the radar and doesn’t pay duties, and he’s importing cars that aren’t specified for this country. [Yet] another challenge is the infrastructure. With all these cars coming in, how do we put them on the road? There’s not one four-lane road in this country.
How are these addressed?
There is the Cambodia Automotive Industry Federation, and we’re trying to unify the dealers. Even though we are competitors, there are a lot of issues where we have the same goal. If there are general concerns, like increase in import duties, we can address those jointly. And jointly we have a bigger voice than one by one. We want to be protected because we make a lot of investments, in hardware, buildings and staff. We want the government to help us communicate the advantages of buying from dealers.
Where does your love for cars come from?
From the fact that I don’t like to walk! But my love for BMWs is different. I’ve used BMWs all my life. From a technological point of view, they are fantastic cars. Ten years ago, we sold an old 760 to Raffles, and last year Raffles [asked us to] look at it. The battery had gone six years ago, and nobody had touched it. We brought it here, changed the battery and put some gas in, and when we turned the key, it was running like a sewing machine. The engine was perfect; it’s amazing.
Why is working here exciting?
This is a frontline economy. There’s not many economies left in the world like this. Everything has to be done; there’s so much opportunity. The business challenge is enormous. [I think] even more brands will enter than already are. The market is very competitive at the top, because even though we are a market leader, you have Audi, Porsche. But competition is good; it keeps you awake.