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BMW and Audi to produce more luxury cars in China

BMW, the world’s largest luxury carmaker, plans to triple production in China to 300,000 vehicles per year, but that will just be less than half of rival Audi’s aim to expand production in the country to 700,000 vehicles annually by 2015. A seemingly limitless source of future demand has been created by China’s burgeoning affluent class, thus transforming the global premium car industry. As a result, car manufacturers BMW and Audi have been exhibiting robust growth: last year, BMW’s growth rate in China was much higher than its other major markets, rising by almost 38% to 233,630 vehicles; and Audi’s retail volume rose by 37% last year to 309,888 vehicles.
BMW rallies behind Audi
BMW’s Finance Chief Friedrich Eichiner is forecasting more retail growth in 2012, from 25-30%. The company, together with its local joint venture partner Brilliance China Automotive Holdings Ltd., will increase investment in manufacturing capacity to US$1.89 billion. A portion of the investment will finance construction of a second plant located in Shenyang, a city near the border of North Korea. Once the plant is operational, BMW will have a combined production capacity of 200,000 vehicles annually in China, but company officials said it will be able to produce more. “Due to our flexible production structure, we will be able to produce up to 400,000 vehicles depending on market development,” said Norbert Reithofer, BMW’S chief executive. On the other hand, Audi, the luxury brand of Volkswagen, already has the capability to assemble 300,000 vehicles a year from complete knock-down kits. In 2013, Audi will begin setting up its new plant in Foshan, in southern China, where an additional 150,000 to 200,000 cars will be added to the 500,000 to 550,000 units expected from its existing plant in Changchun. (May 24, 2012)