BMW to continue rapid development in China, BMW China Trading President explains

Gasgoo.com (Shanghai June 28) - BMW is taking strident measures to increase its market share in China, with the manufacturer recently announcing the introduction of the new 3 Series GT. In an interview with the National Business Daily earlier this week, Xu Zhijun, president of BMW China Trading, described the manufacturer's product and network development plans for the country. A translation of the interview follows:

National Business Daily: "What specific market is the 3 Series GT aimed at?"

Mr. Xu (pictured above): "The 3 Series GT (pictured below) is designed with a brand new segment in mind. [As such], it currently has no direct competitors. This product is aimed towards those with high demands for fashion, functionality and driving control. It is also aimed towards consumers with a high preference for individuality. It encompasses the sport heritage of the BMW brand, as well as offers upgraded functions and accessories. As the Chinese market continues to mature, luxury vehicles are gradually shifting towards targeting increasingly specific market segments."

"In BMW's product strategies, every product has its specific target audience. We hope that every product is able to satisfy all of the demands of their [respective] audiences, rather than only fulfilling some of their demands."

National Business Daily: "How does BMW differentiate between its domestically-manufactured and imported products?"

Mr. Xu: "Currently, the distribution ratio between BMW's domestically-produced and imported automobiles is four to six. In the future [we] will further emphasize domestically-manufactured products. BMW's growth will primarily come from domestically-manufactured products, because only via localized production can BMW become more intimate with the Chinese market."

National Business Daily: "How has BMW's performance in China over the first five months of the year been like? What expectations do you have for the luxury automobile market this year?"

Mr. Xu: "From January to May BMW's sales totaled 148,319 vehicles, [equivalent to] year-on-year growth of 9.8 percent. Currently growth in the luxury automobile market continuously slowing. However, in adherence with [economic] norms, every market has encountered a period of high growth rates which eventually slowed down to more stable rates. At the moment, we are relatively optimistic with regards to the market. Despite slowing growth rates, the market is still relatively large [in actual numbers], therefore the growth is still very significant."

National Business Daily: "Competition in the automobile market this year is still very fierce. Will this affect dealerships' profits?"

Mr. Xu: "The status of dealerships' profits is extremely important to BMW, as it is a crucial requirement to ensuring continued development of the sales network. However, fluctuations in the luxury automobile market recently are relatively large. At various times, changes in the supply-demand relationship will influence prices. BMW believes that price wars are not a way for luxury vehicle brands to succeed and are not sustainable [strategies]."

"As a whole, BMW's dealerships' performance is still very strong. Following various shifts in the automobile market, the profit margins reported by BMW's aftermarket [services] have noticeably increased. Last year, BMW welcomed the one millionth BMW owner in China. This means the total number of BMW customers [in China] has already reached the one million mark."

National Business Daily: "How are plans for BMW's sales network progressing? What opinions do you have regarding development potential in fourth- and fifth-tier cities?"

Mr. Xu: "BMW is continuing to expand its sales network, with the aim of ensuring that our consumers can access the BMW brand in the shortest amount of time. After becoming BMW customers, they will be able to take advantage of BMW's services in the shortest time possible."

"At present, BMW possesses 380 dealerships in China. 58 percent of those are located in third-, fourth- and fifth-tier cities. In line with increasing urbanization, these areas are becoming increasingly important. In the future more and more growth in the luxury automobile market will come from sales of midsize and small luxury cars, therefore is large development room in fourth- and fifth-tier cities."