BMW China increases sourcing from local suppliers

Shanghai. October 8 (Gasgoo.com) - BMW's manufacturing joint venture (JV) with Chinese automaker Brilliance, BMW Brilliance Automotive Ltd, increased the amount of components sourced from within China during the first half of 2007.

Senior vice-president of the JV, Luo Guomin, said that around 2.5 billion yuan (US$335.8 million) of parts were bought in from local suppliers, while 3 billion yuan of parts were imported from elsewhere in the world. He added that this localization is set to rise in the second half of 2007, to around 3.5 billion yuan.

As BMW has already seen local sales rise by around 50% in the past year, and with the company considering expanding capacity in the country to cope with further anticipated growth in demand, it is likely that the automaker will eventually source the majority of its parts from within China, analysts said. 

By the end of first half this year, BMW had over 60 local suppliers in China and the number is expected to rise up to 100 by the end of this year, Chinese newspaper said.

The advantage of sourcing components locally not only stems from the lower costs to produce parts in China, but also from the fact that it bypasses the import tariffs that are applied when parts are shipped from abroad.