BMW Investing $1.4 Billion to Tap China Market Growth

Jason · 05-10-2011, 10:45 AM

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(Reuters) - BMW said on Monday it will invest around 1 billion euros ($1.44 billion) to expand production capacity in China as it seeks to capture surging sales growth in the world's biggest auto market.

BMW is almost doubling its initially planned investment and production capacity at the new plant in Tiexi in the Shenyang will rise to around 200,000 euros over the medium term, BMW said on Monday.

Together with capacity improvements at its Da Dong facility, this will result in potential to make 300,000 vehicles in the long term, it added.

German luxury carmakers including Audi and BMW enjoyed a bumper April of high demand in China ahead of the expected onset of rising fuel prices and tighter registration rules.

Audi, the premium car brand of Volkswagen , sold 13.2 percent more cars in April than a year earlier, helped by a 21.2 percent gain in vehicles sales in China, now the world's largest car market.

Luxury carmakers have racked up eye-popping sales in China, where a growing army of super-rich is fuelling demand for everything from Gucci handbags to Rolls-Royce cars.

But China's car market is expected to cool this year after surging by a third to a record high in 2010.

Daimler, the German maker of Mercedes-Benz cars, said last week it had no indication that demand in China would ease in coming months, though.

BMW -- which last week outshone its rivals with a sharp increase in quarterly sales -- sold 17.9 percent more cars globally in April, helped by about 67 percent growth in China and growing demand in the United States.

China has become BMW Group's third-largest market worldwide. In the first four months of 2011 BMW sales in China rose 70.1 percent to 79,306 automobiles.

Together with joint venture partner Brilliance, BMW will fund a paint shop and a press shop at its Shenyang facility. Additionally, it will expand infrastructure at its plant in Tiexi, Shenyang.

The two markets account for about a third of BMW's group vehicle sales, and BMW has said it expects U.S. sales to continue growing this year while Chinese demand slows.

"We are on track to reach record sales of significantly more than 1.5 million vehicles as well as records for our three brands BMW, Mini and Rolls-Royce," BMW's sales chief Ian Robertson said in a statement.

The U.S. market is lending extra support to the industry with U.S. vehicle sales up nearly 18 percent in April and nearly 20 percent in the first four months of the year.

As gasoline prices in the United States near $4 a gallon, consumers there opt for smaller, more fuel-efficient cars, and a push by German carmakers such as BMW and Porsche to lower fuel consumption in luxury cars is paying off.

Ranjohn · 05-10-2011, 08:00 PM

I do not to want to emphasize on how snobby Chinese people are, (as one of them), and shit like BMW, Merc, Lambs, Ferraris RRs (as they often refer to them as Oxes and Horses) Louis Vuitton, Hermes, Rolex, and so on. They think that no matter how smart you are, money or social status always talks first. So luxury brands will love China over any other country, I bet, in the next decade. What's sad is that they do have no innovation whatsoever.

dmz · 05-11-2011, 01:30 AM

So, Americans aren't snobby? Have you looked around? You are in a BMW forum! The US is the biggest consumer market for luxury brands!

As for innovation. Give them time. After all they just came out of almost half century of represive goverment where innovation and entrepreneurship was not part of their culture. You claim to be a Chinese yourself, but have zero knowledge about chinese culture and their history.

Quote:

Originally Posted by 1006will

I do not to want to emphasize on how snobby Chinese people are, (as one of them), and shit like BMW, Merc, Lambs, Ferraris RRs (as they often refer to them as Oxes and Horses) Louis Vuitton, Hermes, Rolex, and so on. They think that no matter how smart you are, money or social status always talks first. So luxury brands will love China over any other country, I bet, in the next decade. What's sad is that they do have no innovation whatsoever.

1Bimmer54 · 05-11-2011, 05:45 AM

good investing!!!

michaelthepsycho · 05-11-2011, 06:54 AM

Quote:

Originally Posted by dmz

So, Americans aren't snobby? Have you looked around? You are in a BMW forum! The US is the biggest consumer market for luxury brands!

As for innovation. Give them time. After all they just came out of almost half century of represive goverment where innovation and entrepreneurship was not part of their culture. You claim to be a Chinese yourself, but have zero knowledge about chinese culture and their history.

看得懂嗎? 看不到就只是個愚蠢的白人, 愛裝清高. Just testing

Cause you don't really say anything about your own qualifications to talk about the Chinese.

American snobbery is different; more cocky and egotistical than snobby... Just an inherent byproduct being raised with too much pride and not enough brains. Asians are just more realistic, that's all.

Badge whoredom is good for the brand. BMW relies on it to grow bigger.

cmk227 · 05-11-2011, 09:51 AM

[QUOTE=michaelthepsycho;9573985]

Quote:

Originally Posted by dmz

So, Americans aren't snobby? Have you looked around? You are in a BMW forum! The US is the biggest consumer market for luxury brands!

As for innovation. Give them time. After all they just came out of almost half century of represive goverment where innovation and entrepreneurship was not part of their culture. You claim to be a Chinese yourself, but have zero knowledge about chinese culture and their history.

mfanatic325 · 05-11-2011, 10:05 AM

I'm currently dorming in an extremely rural part of China right now for my overseas internship. Have been here for just over a week and a half, and am staying for about two months. And I can't tell you how amazing it is what these people are capable of.
dmz made a good point about China being oppressed for so many years. That really stunted their growth. But considering which, they are seriously kicking ass. I used to be all pro-Taiwan and didn't give a rats ass about China; writing them all off as Communists.
But I'm glad I came on this trip for my internship. Perhaps it's because I'm working at an American-owned factory which makes things seem better, but I'd like to think think that my views are unbiased and just

The people here definitely live an interesting lifestyle, and there are obviously bad apples in every bunch, but for what it is, everyday they cease to amaze me

Not to mention, everything is DAMNED cheap here. I really could get used to life here. Who knows, I might even settle down here in the future. China is looking to be the next--and only?--big power to come

P.S. I get my very own company car, in the form of a 2010 VW Scirocco 1.4L twincharged (one supercharger and one turbo). And it's almost a culture here for them to drive like a bunch of tools, so I've actually kind of had a lot of fun not having to abide by many laws

P.S.S. there are some EXTREMELY rich people here in China. I heard it's because of corrupt government/politicians, etc.
Not too surprising, just an interesting fact. Because out of the mule/ox carts, the cheap broken-down Chinese-copied brand name cars, crappy mopeds, etc. there are every now and then suuuuper nice cars. I hear there's a Veyron just in the city next to me...And don't forget that buying a car here in the mainland is at least double of the cost of a car in the U.S. !

Cerezo · 05-11-2011, 04:23 PM

Quote:

Originally Posted by dmz

As for innovation. Give them time. After all they just came out of almost half century of represive goverment where innovation and entrepreneurship was not part of their culture. You claim to be a Chinese yourself, but have zero knowledge about chinese culture and their history.

The "culture" over there has become, "if i can make a quick buck and get away with it, i'll do it". The name of "innovation" is just another way used get a quick buck, for some people.

A lot has changed there in the last 10 to 15 years.

mfanatic325 · 05-11-2011, 08:22 PM

There may be people that would do whatever it takes to make a quick buck (who wouldn't if they knew they could get away with it?), but it definitely does not apply to everyone here...after all, the population here is over 1.3 billion

Also, you need to check out Shanghai for innovation. Real innovation, not the definition you've given.
Shanghai has progressed more than any other city in China that I know of

Yogijet · 05-11-2011, 11:32 PM

Nice going as usual, BMW!

fredwlau · 05-12-2011, 03:10 PM

I did my high school years in Hong Kong and I can say that this is a good move on BMWs behalf. Hong Kong people have a LOT of money, it's one of the richest "countries" in the world. Mainland Chinese people that come to Hong Kong have stupid amounts of money to spend, so opening a segment in the mainland is a very smart move. Luxury brands are EVERYTHING here.

Apparently Hong Kong has the highest ferrari per capita ratio in the world.

05-10-2011, 10:45 AM	#1
Jason Administrator 43708 Rep 21,325 Posts Drives: F80 M3 Join Date: Mar 2005 Location: USA iTrader: (0)	BMW Investing $1.4 Billion to Tap China Market Growth BIMMERPOST NEWS BMW Investing $1.4 Billion to Tap China Market Growth 10 COMMENTS Tweet (Reuters) - BMW said on Monday it will invest around 1 billion euros ($1.44 billion) to expand production capacity in China as it seeks to capture surging sales growth in the world's biggest auto market. BMW is almost doubling its initially planned investment and production capacity at the new plant in Tiexi in the Shenyang will rise to around 200,000 euros over the medium term, BMW said on Monday. Together with capacity improvements at its Da Dong facility, this will result in potential to make 300,000 vehicles in the long term, it added. German luxury carmakers including Audi and BMW enjoyed a bumper April of high demand in China ahead of the expected onset of rising fuel prices and tighter registration rules. Audi, the premium car brand of Volkswagen , sold 13.2 percent more cars in April than a year earlier, helped by a 21.2 percent gain in vehicles sales in China, now the world's largest car market. Luxury carmakers have racked up eye-popping sales in China, where a growing army of super-rich is fuelling demand for everything from Gucci handbags to Rolls-Royce cars. But China's car market is expected to cool this year after surging by a third to a record high in 2010. Daimler, the German maker of Mercedes-Benz cars, said last week it had no indication that demand in China would ease in coming months, though. BMW -- which last week outshone its rivals with a sharp increase in quarterly sales -- sold 17.9 percent more cars globally in April, helped by about 67 percent growth in China and growing demand in the United States. China has become BMW Group's third-largest market worldwide. In the first four months of 2011 BMW sales in China rose 70.1 percent to 79,306 automobiles. Together with joint venture partner Brilliance, BMW will fund a paint shop and a press shop at its Shenyang facility. Additionally, it will expand infrastructure at its plant in Tiexi, Shenyang. The two markets account for about a third of BMW's group vehicle sales, and BMW has said it expects U.S. sales to continue growing this year while Chinese demand slows. "We are on track to reach record sales of significantly more than 1.5 million vehicles as well as records for our three brands BMW, Mini and Rolls-Royce," BMW's sales chief Ian Robertson said in a statement. The U.S. market is lending extra support to the industry with U.S. vehicle sales up nearly 18 percent in April and nearly 20 percent in the first four months of the year. As gasoline prices in the United States near $4 a gallon, consumers there opt for smaller, more fuel-efficient cars, and a push by German carmakers such as BMW and Porsche to lower fuel consumption in luxury cars is paying off. __________________ Check on the Latest BMW News Become a fan of Bimmerpost Facebook Follow us on Bimmerpost Twitter Subscribe to Bimmerpost Youtube Channel
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05-10-2011, 08:00 PM	#2
Ranjohn Enlisted Member 0 Rep 49 Posts Drives: 2013 335xi Coupe Join Date: Jan 2011 Location: New Jersey iTrader: (0)	Like I do not to want to emphasize on how snobby Chinese people are, (as one of them), and shit like BMW, Merc, Lambs, Ferraris RRs (as they often refer to them as Oxes and Horses) Louis Vuitton, Hermes, Rolex, and so on. They think that no matter how smart you are, money or social status always talks first. So luxury brands will love China over any other country, I bet, in the next decade. What's sad is that they do have no innovation whatsoever.
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05-11-2011, 05:45 AM	#4
1Bimmer54 1 Lover 8 Rep 104 Posts Drives: 2009 BMW 135I Join Date: Nov 2010 Location: California iTrader: (0)	good investing!!!
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05-11-2011, 10:05 AM	#7
mfanatic325 ///M-fanatic 198 Rep 3,885 Posts Drives: '01 911 Turbo Join Date: Oct 2007 Location: Cupertino, CA. iTrader: (23)	I'm currently dorming in an extremely rural part of China right now for my overseas internship. Have been here for just over a week and a half, and am staying for about two months. And I can't tell you how amazing it is what these people are capable of. dmz made a good point about China being oppressed for so many years. That really stunted their growth. But considering which, they are seriously kicking ass. I used to be all pro-Taiwan and didn't give a rats ass about China; writing them all off as Communists. But I'm glad I came on this trip for my internship. Perhaps it's because I'm working at an American-owned factory which makes things seem better, but I'd like to think think that my views are unbiased and just The people here definitely live an interesting lifestyle, and there are obviously bad apples in every bunch, but for what it is, everyday they cease to amaze me Not to mention, everything is DAMNED cheap here. I really could get used to life here. Who knows, I might even settle down here in the future. China is looking to be the next--and only?--big power to come P.S. I get my very own company car, in the form of a 2010 VW Scirocco 1.4L twincharged (one supercharger and one turbo). And it's almost a culture here for them to drive like a bunch of tools, so I've actually kind of had a lot of fun not having to abide by many laws P.S.S. there are some EXTREMELY rich people here in China. I heard it's because of corrupt government/politicians, etc. Not too surprising, just an interesting fact. Because out of the mule/ox carts, the cheap broken-down Chinese-copied brand name cars, crappy mopeds, etc. there are every now and then suuuuper nice cars. I hear there's a Veyron just in the city next to me...And don't forget that buying a car here in the mainland is at least double of the cost of a car in the U.S. !
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05-11-2011, 08:22 PM	#9
mfanatic325 ///M-fanatic 198 Rep 3,885 Posts Drives: '01 911 Turbo Join Date: Oct 2007 Location: Cupertino, CA. iTrader: (23)	There may be people that would do whatever it takes to make a quick buck (who wouldn't if they knew they could get away with it?), but it definitely does not apply to everyone here...after all, the population here is over 1.3 billion Also, you need to check out Shanghai for innovation. Real innovation, not the definition you've given. Shanghai has progressed more than any other city in China that I know of
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05-11-2011, 11:32 PM	#10
Yogijet Captain 14 Rep 602 Posts Drives: 2009 BMW 135i, Jet Black Join Date: May 2010 Location: Palms Valley iTrader: (0)	Nice going as usual, BMW! __________________ BMW Performance Exhaust, Michelin Pilot Supersports F-225/40, R-255/35, BMW Performance Suspension, BMW Performance black kidneys, Quaife LSD, M3 rear sub-f bushings, M3 front control arm, rear guide rod and rear upper link kits, BMW Performance cross-drilled/slotted rotors, AFE Cold Air Intake.
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05-12-2011, 03:10 PM	#11
fredwlau Private First Class 41 Rep 151 Posts Drives: JB3 e90 335i, e92 SG 6MT M3 Join Date: Feb 2010 Location: Pennsylvania iTrader: (0)	I did my high school years in Hong Kong and I can say that this is a good move on BMWs behalf. Hong Kong people have a LOT of money, it's one of the richest "countries" in the world. Mainland Chinese people that come to Hong Kong have stupid amounts of money to spend, so opening a segment in the mainland is a very smart move. Luxury brands are EVERYTHING here. Apparently Hong Kong has the highest ferrari per capita ratio in the world.
	Appreciate 0 Quote