BMW cuts prices and production in China due to slow market image

BMW has not only reduced some prices in China, but the German group will cut production there in order to appease dealers. This is showing strong signs that the luxury demand in the world’s biggest auto market is lowering down.

According to BMW’s China chief, Karsten Engel, the German producer has reduced its manufacturing in the country because of diminished supply for its distributors and it is set to cut its production in the second quarter of this year. Engel said in an interview at the Shanghai Auto Show that “We’re adapting to the situation to make sure dealers are not overstocked. It’s a little bit of a trend downwards. This is the new normal and we have to accept this and we have to adapt to this.”
Over the past number of weeks, foreign car makers such as the German Volkswagen Group and the American Ford Motor Co. have also cut their prices by as much as 10%, with the growth in international car brands reaching close to zero according to investment research company Sanford C. Berstein & Co.

The demand for luxury products has also been influenced by an austerity and anti-corruption drive coming into its third year under the Chinese President Xi Jinping leadership.
The executive for BMW stated that SUVs and compact cars will therefore represent the main growth areas in China for the German carmaker, adding that the auto producer is planning to sell a China-only sedan that is marketed under the 3-series range in the close future.

By Gabriela Florea