BMW plans to increase production of luxury cars at its factory in northeastern China to 100,000 units by 2010, a senior Chinese government official told Reuters on Wednesday, though the carmaker, whose plant with Chinese partner Brilliance China Automotive Holdings Ltd. can only make 30,000 cars now, played down the optimistic target and said nothing had yet been decided.
Go deeper with GlobalData
According to Reuters, Liaoning provincial governor Zhang Wenyue said BMW chairman Helmut Panke had agreed to increase investment in the plant, beyond the €450 million ($US545 million) committed up to 2005, during a visit to officially open the facility last week.
“There was no commitment made, but if the market requires it, then the shareholders are prepared to discuss and finally decide,” BMW Brilliance president Heinz-Juergen Preissler reportedly said at a press conference, adding: “In three or five years from now, it could be 80,000, it could be 100,000, it could be more.”
According to the report, Preissler said the factory is rolling out 42 cars a day and this is expected to rise to 100 a day by the end of the year though he declined to reveal how many cars it would produce in total this year.
Preissler reportedly dismissed worries that China’s economy is overheating, saying that even a percentage point knocked off economic growth would not seriously affect the car market. “The government does not want to put on the emergency brakes,” he said, according to Reuters.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe news agency said the next likely project for the company, which in the first four months of 2004 sold 3,877 3 and 5 series cars, was an engine factory.
“Pretty soon, we’ll make the decision on an engine plant,” Preissler reportedly said, adding it would be located in Shenyang with partner Brilliance. An engine plant was included in the initial investment target of €450 million, though it could require additional funds.
“When the market requires more capacity, we’ll decide on a step-by-step (basis) to expand,” he said, according to Reuters.
The report noted that Brilliance has said it hopes the venture will be profitable this year, which Preissler said he was confident of achieving. He also reportedly said the joint venture will begin using locally-made steel from next year as it looks to reduce dependence on imports and boost localisation.
Preissler told Reuters he was not concerned by German competitor DaimlerChrysler AG’s plans to produce Mercedes-Benz cars in China, saying: “We welcome competition. There’s nothing worse than monopoly,” and adding the company was not planning to cut prices to compete.
According to the report, Zhang, in whose province the factory is based, said by next year the plant should reach its total capacity of 30,000 units, which would then be raised to 50,000 by 2006 and 100,000 by 2010.
The news agency noted that Brilliance, the first state-backed Chinese firm to list in New York when it debuted there in 1992, last month boosted its 2004 sales target for BMW sedans to 18,000 from 15-17,000 previously.
“Demand is still higher than our production capabilities as we are still in the ramp-up phase,” Preissler reportedly said, adding there was a waiting list of several weeks for deliveries.
