BMW setting up for U.S. luxury car market recovery

BMW (BMWG.DE) is aiming to boost its share of a recovering U.S. luxury car market by introducing two crossovers as it expands production capacity at its only U.S. plant.

BMW expects to start selling a new version of its X3 crossover near the end of 2010 and to launch the smaller X1 crossover in the United States in the first half of 2011, executives told reporters on Wednesday at the Spartanburg plant.

The German automaker held a 1.8 percent U.S. market share through the first nine months of 2010, trailing rival luxury carmakers Mercedes and Lexus in overall sales.

The revised X3 has a base price of $37,625, about $2,100 less than the current version of the crossover, and more standard equipment to draw customers from rivals such as Daimler AG's (DAIGn.DE) Mercedes and Volkswagen's (VOWG.DE) Audi, BMW North America President Jim O'Donnell told reporters.

"When Mercedes introduced the GLK, they introduced it at a very attractive price," O'Donnell said. "There is pressure on us to keep prices more or less stable."

The United States is BMW's second largest market, behind Germany, but it could claim the top spot in 2011 and remain there for at least five years with sales of the X3, O'Donnell said. BMW could sell 20,000 X3s in the United States in 2011, he added.

BMW's $750 million expansion at Spartanburg increased production capacity by 50 percent to 240,000 vehicles per year. BMW will build the X3 at Spartanburg for global distribution.

U.S. auto sales totaled about 17 million vehicles a few years ago with the luxury segment accounting for about 2 million vehicles, but plunged to 10.4 million in 2009 during the economic downturn.

BMW's U.S. sales grew nearly 10 percent through the first nine months of 2010 over the year-ago period, while Mercedes sales rose nearly 22 percent and Audi's gained more than 24 percent.

"It's a push market; we have to work, claw and fight for every sale," O'Donnell said, of the current market conditions.

U.S. luxury car market sales could get back to those pre-downturn levels by 2013 or 2014, BMW Chairman Norbert Reithofer told reporters. Luxury car sales could eventually make up 15 percent of sales in the United States, he said.

Reithofer added that China's appetite for premium cars was also growing at a rapid pace. Premium cars made up between 2 percent and 3 percent of overall auto sales in China in recent years, but in 2010, they will be 7 percent, Reithofer said.

"If I have in mind that 10 to 12 percent is not the end for the United States -- it can be 15 percent as well -- you can imagine, what does it mean for China to be 7 percent," he told reporters. "The premium car segment in China is a growing business."