BMW remains upbeat about growth potential in China

To reduce exposure to currency fluctuations, increased production outside of Europe has become crucial for BMW, the largest luxury car maker in the world. Majority of BMW’s cars and engines are produced in Europe, but the carmaker exports a big volume of its production to the U.S. and China, which results in a relatively large exposure to changes in the euro, the U.S. dollar or the Chinese yuan. To further increase its hold on the Chinese luxury car market and increase production capacity, BMW, together with its joint-venture partner Brilliance China Automotive Holdings Ltd. will invest an additional €500 million (US$626 million). The move reflects the German car maker’s optimism about growth potential in China amid the economic conditions in Europe. “China belongs to the three most important markets worldwide for BMW Group and offers great growth potential, particularly in the premium segment,” BMW’s Chief Executive Norbert Reithofer told reporters during the opening ceremony for the carmaker’s second production plant in China. Reithofer emphasized that BMW will maintain balanced growth worldwide and won’t be overly dependent on Chinese sales, adding that stricter emission regulations pose a threat to the company’s planned sales growth in the country. In April this year, BMW’s sales in China rose by 31% from a year earlier, to 27,197 cars, making the country the company’s largest market in the world. (May 24, 2012)