BMW plots further growth in China

BMW is looking to form a joint venture with Chinese carmaker Great Wall Motor.

The car giants are considering the possibility of opening an assembly plant in the eastern Chinese city of Changshu, a BMW executive said, while declining to say what type of vehicles would be put together there.

A venture with Great Wall would be BMW’s second in China, the world’s largest auto market. It has a joint venture with local carmaker Brilliance China Automotive Holdings (1114.HK). Foreign carmakers have to operate in the market with local partners. BMW’s China sales grew 11.3% last year and it is the country’s second-largest premium brand after Volkswagen’s Audi.

BMW is trying to stay ahead of third-place Daimler’s Mercedes-Benz, which recorded 26.6% growth in China sales in 2016 thanks to a fresher model line-up.

Foreign carmakers have recently announced a raft of investments and tie-ups in China, especially in electric vehicles.

China wants electric and hybrid cars to make up at least a fifth of the country’s auto sales by 2025 and plans to loosen joint-venture regulations in the market. Tesla, Ford, Daimler, and General Motors are among firms that have already announced plans for making electric vehicles in China.

Meanwhile, Volkswagen’s Czech carmaker Skoda has underscored its commitment to its home country, saying it was planning to add jobs there amid worries the business could lose some production to Germany.

Skoda has become Volkswagen’s second most profitable brand in terms of operating margin and is on target for record sales in 2017. But capacity is hitting a limit and its success is causing tensions inside the German car group.

Skoda chief executive Bernhard Maier yesterday said that the Czech Republic would remain Skoda’s home and that it was adding jobs locally to meet capacity demands.

“At the moment, concerning global demand, we are not able to cover it from the Czech Republic, (and) for this reason we are looking around at other production capacities,” he said.

Reuters


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