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A Stark view of BMW's future plans in China

By Han Tianyang (China Daily)
Updated: 2009-11-25 08:06

BMW's sales in the Chinese market are expected to increase by at least 30 percent this year, according to Christoph Stark, president and CEO of the BMW Group in China.

Over the first 10 months of this year, the luxury car manufacturer sold 71,952 BMW and mini cars on the Chinese mainland, up 36.7 percent over the same period last year. The sales to date have already exceeded the total volume for 2008, which stood at 65,822 units.

Stark confessed he was "very happy" about BMW's performance in China this year. Given a year-on-year sales increase of more than 80 percent in October alone, he said he could hardly expect more.

In the wake of its robust growth in China, BMW had unveiled plans to enlarge its production capacity in the country, with the announcement coming just 10 days before the auto show. The carmaker will also set up a new plant in Shenyang with its joint venture partner, Brilliance China, and will eventually increase its total annual capacity to 300,000 units per annum.

BMW has taken this major step in the light of the huge growth potential of the overall auto market and, especially, the luxury car segment in China, Stark told China Daily in an exclusive interview.

At present, the number of cars per thousand people in China is still very low, one of strong indicators as to the potential size of the market, according to Stark.

Stark said: "The luxury car segment only accounts for five percent of the overall market, and if the ratio goes up to seven percent, for instance, there would be a huge opportunity for growth.

"The premium car market will have a bright future in China. In the long term, China's premium market will be the largest in the world."

China is currently the fourth largest market for BMW and the number one market for its 7 Series. In light of this boom, the company's announcement of its new plant investment was widely seen as a sign of BMW's active localization strategy in its bid to further exploit the market.

Despite a lot of guesswork related to the 7 Series, the X3 and a number of other models, Stark just restated the previously announced plan regarding the launch of the specially designed 5 Series sedans, with an extended wheelbase, by the end of next year.

He again denied the rumors that BMW was in talks with SAIC Motor Corp to assemble its 7 Series sedans in China.

Stark did confirm, however, that BMW will continue to expand its sales network and local procurement initiatives in China in the future.

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The company currently has more than 130 outlets in China, but that is far from enough in the eyes of Stark. He said that about 200 cities in China have a population of more than 1 million and BMW needs to develop at least one, two or even more dealerships in each of these cities, which means there remains huge room for growth.

Stark also referred to the urbanization policies of the Chinese government, a factor that makes the strong growth of BMW's sales network both possible and desirable.

Last year, BMW's local sourcing volume amounted to 4.4 billion yuan ($644 million). This year it is going to increase further, as the company stated in the earlier announcement of its expansion project. The number of BMW's local suppliers will also continue to grow, from its current level of 150.

According to Stark, the increase of locally made auto parts does not only depend on BMW, but also depends on suppliers. He said: "The more things we can find here that are suitable in terms of quality, price and logistics, the more we will buy parts locally." At the auto show in Guangzhou, BMW launched its 5 Series Gran Turismo, marking the company's latest effort to create a brand-new segment in the market.

Stark was particularly proud of introducing this creative crossover, billing it as "something both elegant and sporty" and saying he looked forward to the response from the public. According to Stark, the company had undertaken in-depth market research and held several focus groups before committing itself to the project.

He said: "As a leading company in this sector, we are pioneers in many aspects of the business - safety, design, performance and fuel efficiency, as well as in overall new car concepts. For me, the 5 Series GT is a demonstration of our leadership capability."

Given its successful experience of creating new market niches with its X3, X5 and X6 models and the appreciative response from its press conference for the new model, Stark was confident about it sales prospects, saying" "I guess it will do well and I'm only afraid that we may have a long waiting list."