BMW's new China plant will quadruple local production
FRANKFURT (Bloomberg) -- BMW began production of the X1 compact SUV today at a new plant in China, as the automaker seeks to quadruple production in the country.
Combined with an existing plant in Da Dong, the Tiexi facility will boost capacity to as many as 400,000 cars a year from the current 100,000, BMW said, lifting its production target and investment plans for the country.
The new plant forms part of a 1.5 billion-euro ($1.9 billion) expansion by the automaker in the country.
The expansion will help the carmaker achieve its goal of boosting global group sales to 2 million by 2016, up from 1.67 million last year and stay ahead of Audi and Mercedes in the global luxury car sales race.
But analysts warned that the move brings risks. "There are no other regions that can provide for such massive numbers of sales as China can," said Prana Tharthiharan Natarajan, a research analyst at Frost & Sullivan in Chennai, India. "In the event of economic turmoil in China, most German automakers could end up with hundreds of thousands of unsold cars."
BMW said that China sales will rise as much as 30 percent this year and it is seeking to balance production globally. "We want to achieve a balance between Germany, the U.S. and China," CEO Norbert Reithofer told reporters at the plant opening.
China accounts for about 25 percent of profit for Germany's high-end automakers, said Juergen Pieper, an analyst with Bankhaus Metzler in Frankfurt. "China's importance for all German premium carmakers is big, but it's much better to be dependent on China than on France or Italy," said Pieper. "Russia and India could be a substitute, but China will remain the number one for five to 10 years."Contact Automotive News