BMW to Boost China Investment – plans to invest 500 million Euro image

Germany’s Bayerische Motoren Werke AG – BMW and its Chinese partner Brilliance China Automotive Holdings Ltd. will together invest €500 million ($628.6 million) to increase production, prepping up for rising demand in the world’s largest auto market.

BMW, one of the largest premium carmakers started production of the X1 compact sport-utility vehicle today at a new factory in China, part of a 1.5 billion-euro ($1.9 billion) expansion. The company said the Tiexi facility will boost capacity to as many as 400,000 cars a year from 100,000.

Chief Financial Officer Friedrich Eichiner said BMW and Brilliance will also expand the production of engines in China, but didn’t elaborate. The joint venture has the capacity to produce 200,000 engines annually and has already invested €1 billion in its two plants in northeastern China’s Shenyang city.

“China is one of the BMW Group’s top three markets worldwide and offers tremendous potential for growth, especially in the premium segment,” Chief Executive Officer Norbert Reithofer said at today’s inauguration ceremony.

But with sales rising in the US and the changeability of the market, Reithofer did not want to say whether China would still be BMW‘s biggest market at the end of the year.

The new factory in the north-eastern city of Shenyang cost 1 billion euros and is BMW‘s most modern.

BMW sold 43,800 more cars globally through the first four months of 2012, compared with a year earlier, with 60 percent of those additional sales in China. For Audi, the main BMW competitor, China accounted for 74 percent of its delivery growth of 49,300 vehicles this year, according to company figures.