BMW opens second Chinese plant, expects to quadruple production
The X1 and long-wheelbase 3-Series enter local production for the world's largest car market.
The new facility in Tiexi, operated by Brilliance Automotive, BMW's joint-venture manufacturer since 2003, is close to the original Shenyang plant that builds 3- and 5-Series models. The new plant will build the X1 compact crossover and the China-only long-wheelbase 3-Series sedan.
BMW expects annual production between the two plants to reach 200,000 units -- double its current capacity -- and said it plans to invest an additional $629 million to increase production to 300,000 units "over the medium term" and up to 400,000 units "depending on market development."
Like other automakers, BMW faces heavy import taxes on its foreign-made models, which makes cars like the M3, priced upwards of $168,000, a rare sight on Chinese roads. Large sedans like the 7-Series start at the equivalent of $142,000, where a loaded 535Li, produced locally, is $16,000 cheaper.
General Motors, the largest foreign automaker in China, sold 431,000 cars in the first four months of this year. BMW sold 107,000 cars in the same period -- a 35 percent increase from 2011. Last month, Ford announced plans to open a fifth Chinese factory, which it says will double annual production to 1.2 million cars in just three years. Among other German luxury brands in 2011, Audi sold 313,000 cars in China -- 32 percent more than BMW -- and Mercedes came in lower, at 193,000.
Analysts and the Chinese government predict a significant drop in market growth this year, to as little as 5 percent, compared with last year's double-digit surge, which led to 16.5 million cars sold, making it the largest market in the world. As local production continues to increase, it's possible some automakers might get stuck with unsold inventory.
Norbert Reithofer, BMW's chairman, was nevertheless bullish on BMW's success in the country. “We expect sales in China to grow at a double-digit rate once again in 2012 and to achieve record deliveries,” he said.
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