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.
Reuters
Reuters
Copyright © 2004 Reuters Ltd. Click for Restrictions.
Comment on this story
Send this story to a friend
Get Home Delivery
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.