BMW to Quadruple China Capacity With Second Factory in Country

Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury cars, will quadruple production capacity in China, prepping for rising demand in the world’s largest auto market.

The capacity at a new plant in Tiexi will rise to 200,000 vehicles in 2014, adding to the 100,000 cars that BMW currently produces at a factory in Da Dong, the Munich-based company said today. Total China production could rise to as many as 400,000 vehicles in the future, the automaker said.

The plants are operated with Brilliance China Automotive Holdings Ltd. (1114) The partners will jointly invest another 500 million euros ($629 million) together to fund the expansion. The investment comes on top of the 1 billion euros spent since 2009.

“China is one of the BMW Group’s top three markets worldwide and offers tremendous potential for growth, especially in the premium segment,” Chief Executive Officer Norbert Reithofer said at today’s inauguration ceremony.

The Tiexi plant is building the X1 compact sport-utility vehicle, and will add a long-wheelbase version of BMW’s best- selling 3-Series starting in the second half. More models could be produced on the Tiexi line, the company said, adding no decision has been made yet.

Workers at Dadong make a stretched version of the 5-Series sedan. A plug-in variant of the vehicle, which was presented as a concept last year, will also be produced there. The Chinese government obliges carmakers to introduce so-called new energy vehicles to counter rising pollution as the numbers of cars on the street in the country multiplies.

Engine Manufacturing

The partners have also started manufacturing four-cylinder engines in Shenyang to supply the local production sites with 200,000 engines a year initially. The opening of the only engine plant outside of Europe underlines the commitment to the Chinese market, Chief Financial Officer Friedrich Eichiner said in a statement.

The joint venture will add 2,000 jobs in the coming years, raising the total workforce to 10,000. The partners began producing vehicles in China in 2003.

BMW’s deliveries in China may gain as much as 30 percent this year, the automaker said today. The BMW brand’s four-month sales in China climbed 35 percent to 100,300 vehicles. Global sales rose 10 percent to 478,030.

China was BMW’s largest market by sales in the first quarter, surpassing Germany and the U.S, Reithofer said.

To contact the reporter on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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