BMW expands into North America to offset China slowdown image

According to the German automaker’s chief executive officer Norbert Reithofer, BMW – the world’s largest premium carmaker – decided to build a new Mexican car factory in order to shed reliance on the slowing Chinese market.

Reithofer commented the automaker’s desire was to counter the world’s largest single auto market, China, where demand is now starting to cool down from the rate seen in recent years, damaging profits by increasing its production footprint in the North American region (NAFTA) – with demand in the US rising steadily thanks to a recovering economy and the recent worldwide oil price drop. “We were really spoiled in the last few years with the growth rates,” in China, he commented on the sidelines of BMW’s annual conference held in Munich. “At one point it was 70 percent, then 60 percent, 50, 40, 30 and then we noticed last year with 16 to 17 percent growth that it was slowing down more and more.” The executive added that besides the slowing sales rate, more crucial for the company is the fact the Chinese business also registered a profit margin slowdown in that period – though the official refrained from giving exact figures for before and after the slowdown.

Last year, representing around 20 percent of BMW’s worldwide deliveries, China sales accounted for a total of 456,732 units, jumping 17 percent from the same period of 2013. For 2015 the forecast is more conservative, with the group expecting a high single-digit percent growth. Reithofer added the normalization of the growth rate in China might be the group’s “next big challenge,” especially when it comes to the Rolls-Royce ultra-luxury unit, which had a 32 percent drop in sales last year.

Via Automotive News Europe