With moderate growth expected in China’s premium-car segment, it hasn’t deterred some of the large automakers from increasing their production in the country.
On Monday, Ian Robertson, a member of BMW AG, officially called Bayerische Motoren Werke AG (FRA:BMW) (BIT:BMW) (ETR:DAI)
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’s management board, said at the Beijing International Automotive Exhibition that BMW will increase its production in China to an annual 200,000 vehicles by the end of the year. Whether the company will proceed with a further expansion, such as an additional 100,000 vehicles, remains to be seen he said.
Robertson noted, “The premium car market will slow somewhat in coming quarters, though it will still be double-digit growth.We have the potential to up production to 300,000, but we’re not going to do it until we’re sure the market will take it.” He added there could also be some unexpected changes in the Chinese market.
In 2011, BMW saw vehicle sales increase 37 percent to about 82,000 cars despite a slowing in China’s auto market to under three percent.
BMW’s growth appears strong. Take a look at this stat which paints a nice global picture: in the first quarter, BMW sold more vehicles in China than it did in the United States. And the sales of luxury autos for the country is only expected to rise. Estimates include an increase at 24 percent in 2012 for China after jumping 34 percent last year.
But BMW isn’t the first automaker this week to announce plans to increase its auto production. Also on Monday at the Beijing show, General Motors Company (NYSE:GM) said it would expand its China dealership network by about 600 in 2012 and almost double its production capacity amid slowing sales growth.
The company also talked about plans for its luxury segment, focusing on its Cadillac model.
In 2012, GM said it would build in China, the new 2013 Cadillac XTS sedan followed by the ELR luxury electric coupe.
Back in December, GM alluded to the expansion in an effort to not lose out to its German rivals. Kevin Wale, GM’s China boss, also talked about the slowing in auto sales but he predicted that China’s sales still have a ways to go on the up side, potentially rising seven to 10 percent this year.
So let the competition begin for China’s luxury segment.
In a recent report, Namrita Chow, Analyst, IHS Automotive wrote, “Premium brands in China are set to register higher growth rates than those seen in the mainstream market over the next five years.” Sales in this segment are poised to grow a cumulative 139 percent from 2010 to 2015.
Daimler AG (ETR:DAI) (PINK:DDAIF) (FRA:DAI) is also looking for a piece of the pie in China’s luxury market. Dieter Zetsche, Chairman of the Board of Management at Daimler is also attending Beijing’s show and shared his confidence that growth in this luxury segment will outrun the grown seen in the wider auto market.
Zetsche said, “We expect the total market to grow by 5 percent, and the premium market to grow by 15-20 percent.”