BMW aiming to be number one in the Chinese market

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BMW has big aspirations for the Chinese market, but can aspirations be turned into a reality? Its nearest rival, Audi, is already several light years ahead of BMW in terms of sales and market share however there is a large amount of growth left in the Chinese luxury car market and BMW seem sure footed enough to exploit the market.

BMW can be praised by being one of the first car manufacturers in China to realize that small doesn’t always need to be low cost, the introduction of the British (and Austrian) made MINI range was initially thought to be a pipe dream – small cars costing more than 100,000rmb were rare when the small car brand launched in China, but MINI’s were selling at 200,000rmb and rising. Somehow, MINI became a success, 2010 sales were more than 10,000 units and are showing strong growth in 2011. The introduction of the 1 series only served to further the idea that premium cars could be small cars too, unusually, BMW caught Mercedes and Audi with their pants down.

China Daily is running an article with BMW China’s CEO, Dr Christoph Stark, which throws some light onto BMW’s plans for the Chinese market and the expansion of the BMW-Brilliance joint venture.

Foreign carmakers are bringing new products to market in China faster than ever as the country is increasingly important in their global strategies.

BMW is no exception.

The second-generation BMW 1 Series was launched in China on Dec 15, just three months after its global debut at the Frankfurt Motor Show.

The design of the new generation is a powerful expression of the latest technological advances. The model’s fresh, youthful image has been stylishly updated, using the latest BMW design language.

The BMW 1 Series is also the first model to be offered with the BMW Sport Line and BMW Urban Line, providing exclusive opportunities for personalization.

“Each time we try to bring some more value to our customers,” Dr Christoph Stark, president and CEO of BMW Group Region China, said in an interview after the launch ceremony.

The CEO also stated that he sees great potential in China for the all-new BMW 1 Series, which offers a unique driving performance as the only rear-wheel-drive car in the segment.

As the smallest member of the BMW family, the 1 Series is generally seen as an entry-level model for people who want to own an “ultimate driving machine”. Its main target consumers in China are young white-collar professionals that intend to buy their first BMW cars, he said.

The original 1 Series has reached 1 million units sales since its global launch in 2004, and Dr Stark believes that the second generation will have a better performance in terms of sales both in China and globally.

Three years ago, BMW was the first luxury carmaker to introduce the premium compact model in China despite doubts by some that the 1 Series would be the right product at the right time. The decision proved wise as the model was well received by consumers.

BMW indicates at the time its 1 Series was actually creating a new market segment in the country with no real competitors. By 2010 its German counterparts were also bringing their compact models to China.

Beginning with the Guangzhou auto show in November, BMW also launched its 5 Series Touring, the carmaker’s first station wagon sold in the country.

“We believe the market is growing and maturing, and we will always want to be at the forefront of new development, like (the case of) the 1 Series three years ago,” Dr Stark noted.

Strong product mix

BMW now sells the locally produced 3 Series and 5 Series in China along with a rich lineup of imported models ranging from SUVs to sports cars and limousines. The “strong mix” of products is crucial to BMW’s sustainable growth, said Dr Stark.

BMW Group has seen its sales more than double in the past two years from 90,000 vehicles in 2009. Deliveries this year between January and November totaled more than 215,000 units, a surge of 40.7 percent over a year ago.

It is now the second-largest luxury carmaker in China after Audi and ahead of Mercedes-Benz. But the situation is gradually changing, according to the CEO.

In Guangdong and some other regional markets, BMW now has greater sales and market share than its competitors, he said. “It shows, in China, BMW can be number one in terms of numbers.”

Dr Stark said he believes that the company will continue to grow in the coming year due to the strength of the brand in China.

“There is still a very visible desire of consumers to buy strong brands,” he said. “The attractiveness of our brand is there, so more people will opt for BMW.”

And he suggested that the picture of the company’s sales targets for 2012 will be clearer after the first quarter next year.

Positive outlook

The president said he believes the overall economy in China will register an increase in GDP of around 8 percent as the government finds ways to maintain stable growth in the most important industries, moves that could include enhanced State-funded investment projects.

“In the medium and long term I am very positive about the Chinese market,” he noted. “The market is so young that it will grow in all directions.”

Currently the carmaker is producing its 3 Series and long-wheelbase 5 Series sedans at a joint venture plant in Shenyang, capital of Liaoning province in Northeast China.

A second plant in the same city will be ready to produce BMW’s new 3 Series and X1 SUVs early next year.

An engine plant will also begin operation at the joint venture in 2012 – only BMW’s fourth globally – producing a four-cylinder engine with BMW’s TwinPower Turbo Technology. The locally produced X1 and other models will be equipped with the new engines.

The manufacturing complex taking shape in Shenyang will be one of the automaker’s biggest, most complete production sites worldwide and bring its yearly output in China to 300,000 vehicles a year or more if needed.