(Bloomberg) -- BMW AG, the world's largest maker of luxury cars, plans to start a car-leasing business in China in 2012 to help boost its presence in the fast-growing auto market.
“Based on our experience in other markets, we see great potential for development” in car leasing in China despite limited demand at the moment, Friedrich Eichiner, the member of BMW's management board responsible for finance, said in Beijing today.
A leasing business and a new finance arm, announced earlier this week, may help the Munich, Germany-based automaker increase sales in China's fast-growing luxury sector. Sales of luxury cars in the nation may grow at almost double the industry pace of 20 percent to reach 530,000 units this year and 1.1 million by 2015, according to researcher J.D Power & Associates.
BMW said Sept. 14 it won had approval from China Banking Regulatory Commission to set up an automotive finance company. BMW Automotive Finance China Co. is 58 percent held by the European carmaker, while BMW Brilliance Automotive Holdings Ltd., BMW's Chinese joint venture, owns 42 percent, Wu Xiaoan, the partnership's chairman, said today.
The finance unit is expected to start operations before the end of this year, Kirk Cordill, its chief executive officer, said today.
BMW expects the new car-finance arm to account for less than 10 percent of its sales in China next year, similar to the ratio currently achieved through an agreement with Shenzhen Development Bank Co., Cordill said.
Over time the proportion will rise as financing may appeal to younger customers, he said.
The German automaker's sales in China reached 106,000 in the first eight months of the year, surpassing its deliveries there last year, BMW said this month.
Speaking at a separate conference in Chengdu, Sichuan province, Ivan Koh, president of the BMW's China operations said it will expand its dealer network in the nation to 200 locations from 165 by the end of this year.