BMW, Mercedes See Extra Legroom Supporting Higher Sales Forecast for China

Bayerische Motoren Werke AG raised a sales forecast for China and Daimler AG’s Mercedes-Benz said it’s targeting 43 percent growth, as the world’s two biggest luxury carmakers roll out sedans developed exclusively for Chinese buyers.

BMW intends to deliver 120,000 BMW, Mini, and Rolls-Royce vehicles in China in 2010, 20 percent more than a previous projection, Chief Executive Officer Norbert Reithofer said at the Beijing auto show today. Mercedes-Benz plans to sell at least 100,000 vehicles, Daimler CEO Dieter Zetsche said.

The two luxury carmakers introduced extended versions of their full-sized 5-Series and E-Class sedans at the show. The new cars, which offer more legroom, are targeted at Chinese luxury-car buyers, who are typically chauffeured. Daimler also premiered an upgraded version of its Maybach ultra-luxury nameplate and showed the “Shooting Break” Mercedes concept car, which combines elements of a wagon and coupe.

“I have absolutely no doubt that the market here will keep growing at double-digit rates for years to come,” Thomas Weber, development chief of Stuttgart, Germany-based Daimler, said in an interview at the show.

It’s “not impossible” that Mercedes will pass BMW in China this year and become the number-two upscale carmaker in the country, after Volkswagen AG’s Audi, Zetsche said.

Photographer: Nelson Ching/Bloomberg

Norbert Reithofer, chief executive officer of Bayerischen Motoren Werke (BMW) AG, speaks at an event prior to the Beijing Auto Show in Beijing, on April 22, 2010. Close

Norbert Reithofer, chief executive officer of Bayerischen Motoren Werke (BMW) AG,... Read More

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Photographer: Nelson Ching/Bloomberg

Norbert Reithofer, chief executive officer of Bayerischen Motoren Werke (BMW) AG, speaks at an event prior to the Beijing Auto Show in Beijing, on April 22, 2010.

Audi Forecasts

Audi, which forecasts 26 percent growth to 200,000 cars and sport-utility vehicles in China this year, premiered an updated long version of the top-of-the-line A8 in Beijing. The introductions underscore the country’s importance for high-end automakers as European and U.S. markets struggle to recover from the global financial crisis.

The Mercedes model introductions are “an acknowledgement of the Chinese market, which continues to emerge as a driving force for our entire sector,” Zetsche said. Mercedes may expand its offering in China with an extended version of the entry- level C-Class sedan, he said.

BMW’s new China sales target would mean a 33 percent increase from the 90,500 cars and SUVs sold in China last year.

The carmaker sees potential to produce as many as 300,000 vehicles a year in China over the long term, said Reithofer, Capacity expansion “will always” lag sales growth, he said.

Still, a surge in auto factory investments may lead to overcapacity in China in five years, with local plants producing at 66 percent of capacity by 2015, below the 80 percent level traditionally required to cover fixed costs, according to J.D. Power & Associates.

Brilliance China

BMW, with partner Brilliance China Automotive Holdings Ltd., is expanding its Shenyang factory and building a second facility for 560 million euros ($744 million). The Munich-based automaker, which began producing 3- and 5-Series models in China in 2003, will more than double capacity to 100,000 vehicles by 2012 from 41,000 in late 2009.

The company may add production of the X1 compact SUV in China when the second factory opens in 2012. “We are currently exploring this possibility together with the authorities here in China,” Reithofer said.

The Munich-based manufacturer also plans to build a so- called New Energy Vehicle for China, together with Brilliance.

BMW’s Rolls-Royce brand reported today that first-quarter sales in China more than tripled, helping boost global deliveries by 60 percent.

Springboard

Daimler could use China as a springboard for growth in other markets, Weber said in the interview. The company may export an electric vehicle it’s developing with BYD Co. for China to other markets following its 2013 launch, he said.

Daimler’s cooperation with BYD, the Shenzhen-based automaker backed by billionaire Warren Buffett, has “huge prospects,” with sales of the battery-powered vehicles likely to exceed 10,000 units, development chief Weber said.

“If it turns out to be successful, then one has to see” about exports, Weber said. “We’d be ill-advised to rule this out.”

Audi’s parent, Volkswagen, which plans to start producing battery-powered cars in China as soon as 2013, sees the country as the cornerstone of its ambitions to be the global electric- car leader by 2018.

“China is the most important market worldwide for Volkswagen, and the success of e-mobility is decisive,” Chief Executive Officer Martin Winterkorn said today in a statement.

Volkswagen presented the E-Lavida, the first electric vehicle developed in China, at the show. A battery-powered version of the Golf and the Lavida will be tested in China as preparation for a broader market launch. The E-Up! city car is due to go on sale in China in 2013, Volkswagen said today.

To contact the reporters on this story: Andreas Cremer in Beijing via acremer@bloomberg.net; Chris Reiter in Berlin at creiter2@bloomberg.net

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