Competition in China will intensify with price cuts in the long-term according to BMW's senior representative in the country.

Christophe Stark, president and CEO of BMW Group Region China, said in an interview with China Daily that competition will be 'extremely fierce' in China's premium car market.

"Yet in short term, we face pressures from rising costs of raw materials as the official inflation rate in China is now between 3 and 4 percent," he told the newspaper.

He made the remarks when the German carmaker signed an agreement as the exclusive automobile partner of Chinese Olympic Committee over the next six years, part of its global Olympics strategy.

"We are excited to become a partner with the Chinese Olympic Committee and the Chinese Sports Delegation. BMW's joining together with the Chinese Olympic Movement is based on the shared values and the common vision," Stark said.

"The Chinese Olympic Movement has won great honour for the country - it reflects the dreams, passion, dynamics and innovation of millions of Chinese. This is perfectly matched with what we are advocating, BMW Joy."

The China Daily noted that BMW apparently aims to utilise its Olympics strategy to boost its competitiveness among Chinese premium car buyers.

"China will be the biggest market for all luxury brands but it will be a fiercely contested market," Stark said. "We are preparing to succeed in the competition."

The carmaker is also building a second plant in Shenyang. Last year, BMW announced a long-term plan to hike its overall production capacity in China to 300,000 units a year.

China is now BMW's third-biggest market after Germany and the US.

In the first three quarters of this year, the group's sales in the Chinese mainland reached 122,000 units, almost double the figure in the same period last year.