BMW Group and Brilliance China Automotive Holdings have signed a contract for a production and distribution joint venture in China at the Great Hall of the People in Beijing.

The signing paves the way for the planned local production of BMW cars in Shenyang, the capital of Liaoning Province in the North-East part of the People’s Republic of China.

The contract was signed by Dr. Helmut Panke, chairman of BMW AG, together Wu Xiao An, chairman of Brilliance China Automotive Holdings. Top ranking officials from relevant ministries in Beijing and senior executives from both parties witnessed the signing of this milestone contract.

“The joint venture in China is a crucial step for the BMW Group”, said Panke. “This will allow us to consistently expand and strengthen our position in one of the most important automobile markets of the future.”

Wu said: “This joint venture between Brilliance and the BMW Group will allow both parties to tap into the vast potentials of the fastest growing automotive market in the world while giving many more Chinese consumers the opportunity to enjoy the renowned qualities of BMW Group products. The foundation of the joint venture is also a milestone for the Chinese automotive industry since it will set new standards for the production of automobiles and related services.”

The written approval of the jointly prepared feasibility study was received from the State Development and Planning Commission on March 14 2003. The final stage in the procedure leading to the official foundation of the joint venture is the approval of the joint venture contract and the granting of the business licence by the government authorities.

The joint venture will produce, sell and service BMW cars with initial production planned for the second half of 2003. In the medium term, an annual production of around 30,000 3 and 5 series vehicles is envisaged.

In Shenyang, the joint venture will incorporate essential parts of the new plant built in 1999 by Brilliance Auto, expanding these local operations into a fully-fledged production facility in line with BMW standards of quality worldwide.

BMW Group and its Chinese counterpart each will hold a 50% share in the joint venture. A total of 450 million euros is to be invested by 2005. In the medium term, the joint venture will employ approximately 3,000 staff. The local supplier industry is continuously being expanded. For the first generation of vehicles produced in China, local content of approximately 40% is expected. The dealer network will be adapted continuously to the production volume.

Over the next five years, BMW is planning to increase its annual sales in Asian markets from around 80,000 to 150,000 units.

The company is continuing on a path of ongoing growth in China; customer deliveries increased in 2002 by 41.4 per cent to 15,500 vehicles (the Chinese mainland, Hong Kong and Taiwan markets). Following the USA and Germany, these markets have now become the third largest sales region for the 7 Series in the 2002 financial year. In the first quarter of 2003, the BMW Group expects a sales volume of around 4,400 BMW and Mini vehicles in Greater China, an increase of nearly 30% compared to the equivalent period of 2002.