BMW pumps up the volume, boosting exposure in its biggest market worldwide

Germany's BMW AG has extended the terms of its Chinese joint venture and announced an extensive investment in the country, setting the course for the next chapter of the premium automaker's success story in its biggest market worldwide.

BMW, together with its partner Brilliance China Automotive Holdings, announced on Thursday that BMW Brilliance Automotive Ltd's contract had been extended to 2040.

The announcement was made when the two partners celebrated the 15th anniversary of the joint venture, located in Shenyang, capital of northeastern China's Liaoning province.

"We are consistently following our growth strategy for China," said Harald Krueger, chairman of BMW AG.

"Our success story goes hand in hand with the success of the BBA joint venture. Together with our partners, we are contributing to the sustainable development of the Chinese market," he added.

BMW also pledged to invest more than 3 billion euros ($3.5 billion) in new and existing facilities in Shenyang over the coming years.

Nicholas Peter, the BMW board member responsible for finance, said the move laid the foundation for further growth of the brand in China.

The joint venture currently has two plants - Tiexi and Dadong - and combined they produced 400,000 BMW vehicles last year, up 30 percent year-on-year.

BMW said it will build an additional plant in Tiexi, while Dadong will be remodeled for future models.

When completed, the new plant in Tiexi, with its highly flexible production system, will be able to build vehicles with fully electric, partially electric and conventional drivetrains on a single production line.

As a result, the joint venture's combined production capacity will rise to 650,000 units from the early 2020s, according to BMW.

BMW is localizing six models in China, with more to be introduced in coming years. From 2020, the fully-electric iX3 will also roll off the production line at the Dadong plant, and be sold globally. "With our highly flexible production system, we can respond quickly to market demand and will be able to ramp up production of electric vehicles to 100 percent of our output," said Oliver Zipse, a board member of BMW AG, responsible for production.

BMW anticipates strong growth in demand for new energy vehicles in China. With six electrified models currently available in the country, the carmaker said it offers Chinese customers the widest range of options in the premium segment.

Last year, BMW more than doubled its sales of electrified vehicles in China from the previous year. It expects the growth to continue in 2018.

Jochen Goller, president and CEO of BMW Group Region China, said BMW has benefited from China's reform and opening-up over the past years.

In the first eight months of 2018, deliveries exceeded 400,000 units, up 4.2 percent year-on-year.

In 2017, around 560,000 BMW brand vehicles were delivered to customers in China.

Goller said the group will step up efforts to expand its presence in the country, now its largest market globally, to offer customers more innovative products and experiences.

BMW is launching 16 new products this year, and an ongoing product rollout is planned in the upcoming years to continue its success in China.

Analysts said the manufacturer has been making great contributions to local economic development. BMW Brilliance has been the biggest taxpayer in Shenyang, Liaoning province since 2005. Last year, its tax totaled more than 24 billion yuan ($3.52 billion).

"With this additional investment, innovation and job creation, we will continue our high-quality development and drive economic growth in Liaoning province," said Johann Wieland, president of BMW Brilliance.

BMW Brilliance has invested more than 52 billion yuan in its plants in Liaoning province since 2009. The joint venture employs more than 18,000 employees.

Since its founding in 2003, the number of its suppliers has risen to more than 350, of which around 80 have set up locations in Liaoning.

(China Daily 10/15/2018 page18)