BMW aims to drive up output

BAYERISCHE Motoren Werke AG plans to increase production capacity in China to meet growing demand, a move that would see the nation leapfrog Japan as the biggest market in Asia for the car maker.

The world's largest luxury car maker said yesterday during its Asia Conference that it has started discussions with its Chinese partner on whether to expand its output via setting up a new factory or adding shifts.

BMW partnered China's Brilliance Automotive Holding Group, producing BMW 3 Series and BMW 5 Series with a designed annual capacity of 30,000 units. The plant, in Shenyang, capital of Liaoning Province, assembled 23,000 units last year, running close to its full capacity with three working shifts.

"All experts have underestimated the growth potential of the Chinese market and we are surprised at our strong sales every year," said Michael Ganal, member of the Board of Management of BMW AG. "It's time to prepare and participate in the fast growth."

The car maker has plans to invest 19 billion euros (US$25 billion) for 2005 to 2009 globally to expand capacity and products. It has just opened its first Chinese distribution center for spare parts in Beijing and a second one in Shanghai is expected soon.

Sales under the BMW and Mini brands on the Chinese mainland jumped 51.3 percent to 36,357 units last year, a growth of more than 50 percent for the second consecutive year despite increased competition from DaimlerChrysler AG's Mercedes-Benz and Volkswagen AG's Audi in China.

BMW's brisk sales and production expansion are expected to see China replace Japan as its biggest market in Asia within the decade, Ganal said.

Last year, 62,000 units were sold in the Japanese market, a climb of 5.6 percent from a year earlier. China will also contribute to one-third of BMW's target to sell 150,000 units by 2008 in Asia from 12,700 last year.