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johnoz
04-20-2005, 09:01 AM
China's premium car segment will lag market in '05, BMW says

Reuters
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Copyright 2004 Reuters Ltd. Click for Restrictions.

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SHANGHAI - German automaker BMW expects China's premium car segment to generate slower growth than lower-priced downmarket models this year, the head of its Chinese joint venture said on Wednesday.

But it stuck to its goal of boosting 2005 sales at BMW Brilliance Automotive Ltd., its venture with Brilliance China Automotive Holdings Ltd. that makes 3-Series and 5-Series BMW cars for the domestic market.

"The premium segment has a good future. However, I think this year we will see in the premium segment smaller growth than in the other segments," Eberhard Schrempf told an Automotive News industry conference, without being more specific.

"For our 3-Series ... right now in China the middle class is not yet where we see that in other countries."

Chinese car sales grew just 15 percent in 2004, after almost doubling in 2003, and analysts expect sales in the world's third-largest vehicle market to grow by only 10 percent this year.

The head of Ford Motor Co.'s Volvo Car Corp. earlier told Reuters he expected China's premium car segment to probably triple over the next five years, thanks to breakneck annual economic growth and an increasingly cash-rich and style-conscious middle class.

China's economy grew by a faster-than-expected 9.5 percent in the year through the first quarter.

Premium brands make up just 5 percent of China's car market, where 2.3 million sedans were sold in 2004, versus more than a 10th in a developed market such as the United States.

BMW targets annual sales of 30,000 units from the venture in northern China, just a few hours drive from the North Korean border, but Schrempf declined to set a timetable for that.

"Whether we achieve that in the next five years I don't know exactly," he said in response to a question.

Cars made by the venture accounted for 8,660 unit sales in China last year. Asked by reporters if the venture's sales would grow this year, he said: "That is the target, yes."

Schrempf stressed that a 3-Series BMW made in China had "absolutely the same level" of quality as the same model built in Germany, but added manufacturing costs were slightly higher in China because of lower volumes.

BMW was working on developing a car it could sell to Chinese government agencies at prices above 250,000 yuan ($30,200), he said.

It was also trying to convince local buyers that the premium segment was not just for chauffeur-driven models, a perception that gave rival and segment leader Audi a competitive advantage with its stretched A6 model.

Brilliance is China's top minibus maker and the first state-backed firm to list in New York when it debuted there in 1992.

Brilliance had hoped to sell 18,000 BMWs last year to complement sales of its own slow-selling Zhonghua sedans.

BMW's sales in Chinese markets, including Hong Kong and Taiwan and including imports, fell 10.2 percent to 24,321 units last year as the Chinese government cooled red-hot demand for cars. Sales in mainland China alone retreated around 16 percent.

"The BMW group nevertheless expects to record above-average sales volume growth rates on the Chinese markets in the coming years," it said in its 2004 annual report.

China is BMW's second-biggest Asian market after Japan.

Darkness95m3
04-20-2005, 09:13 AM
China's premium car segment will lag market in '05, BMW says

Reuters
Reuters
Copyright 2004 Reuters Ltd. Click for Restrictions.

Comment on this story
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SHANGHAI - German automaker BMW expects China's premium car segment to generate slower growth than lower-priced downmarket models this year, the head of its Chinese joint venture said on Wednesday.

But it stuck to its goal of boosting 2005 sales at BMW Brilliance Automotive Ltd., its venture with Brilliance China Automotive Holdings Ltd. that makes 3-Series and 5-Series BMW cars for the domestic market.

"The premium segment has a good future. However, I think this year we will see in the premium segment smaller growth than in the other segments," Eberhard Schrempf told an Automotive News industry conference, without being more specific.

"For our 3-Series ... right now in China the middle class is not yet where we see that in other countries."

Chinese car sales grew just 15 percent in 2004, after almost doubling in 2003, and analysts expect sales in the world's third-largest vehicle market to grow by only 10 percent this year.

The head of Ford Motor Co.'s Volvo Car Corp. earlier told Reuters he expected China's premium car segment to probably triple over the next five years, thanks to breakneck annual economic growth and an increasingly cash-rich and style-conscious middle class.

China's economy grew by a faster-than-expected 9.5 percent in the year through the first quarter.

Premium brands make up just 5 percent of China's car market, where 2.3 million sedans were sold in 2004, versus more than a 10th in a developed market such as the United States.

BMW targets annual sales of 30,000 units from the venture in northern China, just a few hours drive from the North Korean border, but Schrempf declined to set a timetable for that.

"Whether we achieve that in the next five years I don't know exactly," he said in response to a question.

Cars made by the venture accounted for 8,660 unit sales in China last year. Asked by reporters if the venture's sales would grow this year, he said: "That is the target, yes."

Schrempf stressed that a 3-Series BMW made in China had "absolutely the same level" of quality as the same model built in Germany, but added manufacturing costs were slightly higher in China because of lower volumes.

BMW was working on developing a car it could sell to Chinese government agencies at prices above 250,000 yuan ($30,200), he said.

It was also trying to convince local buyers that the premium segment was not just for chauffeur-driven models, a perception that gave rival and segment leader Audi a competitive advantage with its stretched A6 model.

Brilliance is China's top minibus maker and the first state-backed firm to list in New York when it debuted there in 1992.

Brilliance had hoped to sell 18,000 BMWs last year to complement sales of its own slow-selling Zhonghua sedans.

BMW's sales in Chinese markets, including Hong Kong and Taiwan and including imports, fell 10.2 percent to 24,321 units last year as the Chinese government cooled red-hot demand for cars. Sales in mainland China alone retreated around 16 percent.

"The BMW group nevertheless expects to record above-average sales volume growth rates on the Chinese markets in the coming years," it said in its 2004 annual report.

China is BMW's second-biggest Asian market after Japan.

I guess so with the size of the population. Give it a few more years and it will be the biggest market.

rico328i
04-20-2005, 10:02 AM
I agree. NO surprise there since there's 1.4+ Billion people living there!!

They'll be the biggest market in just about 'everything' soon.

johnoz
04-20-2005, 10:19 AM
I guess so with the size of the population. Give it a few more years and it will be the biggest market.

Being the biggest Asian market, guess where BMW will consider building manufacturing plants?

qimis
04-20-2005, 10:26 AM
Being the biggest Asian market, guess where BMW will consider building manufacturing plants?

"The BMW Group has now expanded its international production network with a new plant in Northeast China. BMW automobiles have been rolling off the assembly line in the new Shenyang plant, located in Liaoning province, since September 2003. The plant is a joint venture between the BMW Group and Brilliance China Automotive Holdings Ltd. and will be producing up to 30,000 BMW automobiles for the Chinese market within several years. Production began with automobiles of the BMW 3 Series, followed by those of the BMW 5 Series. The Shenyang plant fullfills the same high process, quality and safety standards as all other BMW Group locations.

With the startup of production at this site, the BMW Group has achieved a significant milestone in its latest market offensive. Automobile production in China for China is an important step in opening up this market. Today, the BMW Group manufactures automobiles in a worldwide network comprised of 23 locations on four continents. The BMW Group has been present in China since 1994, when it opened a representative office in Beijing.
"

johnoz
04-20-2005, 10:29 AM
"The BMW Group has now expanded its international production network with a new plant in Northeast China. BMW automobiles have been rolling off the assembly line in the new Shenyang plant, located in Liaoning province, since September 2003. The plant is a joint venture between the BMW Group and Brilliance China Automotive Holdings Ltd. and will be producing up to 30,000 BMW automobiles for the Chinese market within several years. Production began with automobiles of the BMW 3 Series, followed by those of the BMW 5 Series. The Shenyang plant fullfills the same high process, quality and safety standards as all other BMW Group locations.

With the startup of production at this site, the BMW Group has achieved a significant milestone in its latest market offensive. Automobile production in China for China is an important step in opening up this market. Today, the BMW Group manufactures automobiles in a worldwide network comprised of 23 locations on four continents. The BMW Group has been present in China since 1994, when it opened a representative office in Beijing.
"

Schrempf stressed that a 3-Series BMW made in China had "absolutely the same level" of quality as the same model built in Germany, but added manufacturing costs were slightly higher in China because of lower volumes.


So German workers and union leaders must be shitting their pants for some time. I always wondered where that BO came from :)
This would also explain why we hav Kia or Hyundayi looking BMWs in the market with less sophisticated interior arrangements.

328is_Perf
04-20-2005, 10:32 AM
if the North American BMW's ever come made from China.. I'm going to kiss BMW goodbye .. BMW ... Made in China...

SickFinga
04-20-2005, 10:40 AM
if the North American BMW's ever come made from China.. I'm going to kiss BMW goodbye .. BMW ... Made in China...


i dont get it, whats the difference where it is made.
quality standards do not change.
I dont see why woulld a German put tpgether a car better than Chenese person.

duffy325
04-20-2005, 11:58 AM
i dont get it, whats the difference where it is made.
quality standards do not change.
I dont see why woulld a German put tpgether a car better than Chenese person.

Agreed. Otherwise it would seem we shouldn't buy any BMW's out of North Carolina either since american car quality not at par with imported competition. Assuming that training, facilities, quality control etc... is the same whats the difference?

Darkness95m3
04-20-2005, 04:19 PM
I agree. NO surprise there since there's 1.4+ Billion people living there!!

They'll be the biggest market in just about 'everything' soon.

We are in trouble. Make that BIG trouble.
Now I know why I married an Aaian.

johnoz
04-20-2005, 04:35 PM
Chinese BMW Zhonghua

http://auto.sohu.com/piclib/huachen/zhonghua/zhonghua/big/huachenzhonghua11.jpg