BMW to expand China venture for premium car market

Shanghai, June 20 (Gasgoo.com) In an effort to tap further into the luxury car market in China, BMW AG is set to invest more in its Chinese venture BMW Brilliance Automotive Ltd., which will kick off the construction of its second plant later this year.

The new plant will start operation by January 2010 and might focus on making BMW 1 series, a compact car model to be introduced by BMW AG into the Chinese market in June this year, said Qi Yumin, president and CEO of Brilliance China Automotive Holdings Ltd.

Brilliance China Automotive has been in talks with the top German luxury car manufacturer on issues like production capacity expansion and product introduction for a long period of time, added Qi. It is a tough job, as both sides aim to reach an agreement on many issues. Brilliance China Automobile has unveiled its favor for local production of BMW 1 series cars. The production capacity of the venture is expected to total 100,000 units after the completion of the plant.

BMW Brilliance Automotive, founded in May 2003 and headquartered in northeast China's Shenyang, is a 50-50 joint venture between German premium car maker BMW and Chinese homegrown automaker Brilliance China Automotive. Currently BMW has only one plant in China, focusing on making BMW 3 Series and 5 Series cars. The annual capacity of the facility is about 41,000 units. The venture's output capacity of BMW 3 series and BMW 5 series cars stood at about 30,600 in 2007.

Both the output and sales volume of the two BMW car models enjoyed a yearly rise of more than 20% in the first quarter of 2008. During the three-month period, it sold a total of 8,035 BMW 3 series and BMW 5 series cars, compared to 30,200 units of Audi A4 and Audi A6, two luxury car models rolled out by FAW Volkswagen.

Therefore, it has become a must for BMW to expand its production capacity and defend its status as a top seller of luxury cars in China, the world's fastest-growing auto market.