Bayerische Motoren Werke AG (BMW) Worried About Slowing Growth Rate And Demand In China

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The high-growth Chinese premium car market seems to be stabilizing according to Bayerische Motoren Werke AG (ETR:BMW)’s China Head. The premium automaker is all set to maximize local production for double-digit growth. At the same time, the competition in the luxury car segment is on the rise with Ford Motor Company (NYSE:F) introducing Lincoln brand in China and Nissan Motor Co Ltd (ADR) (OTCMKTS:NSANY)’s Infiniti.

China presents the largest automaker market with double-digit growth in the last several quarters. However, Karsten Engel, Chief Executive of BMW China, said, “Everything is normalizing in China – the market growth, the volume growth, the margin growth.” The company registered growth of 20% during the first half of the year but the slowing market has reduced growth rate to 8% in the second half.

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While discussing the local production practices of Bayerische Motoren Werke AG (ETR:BMW), Engel said that the company is likely to increase local production to six models in this decade. Local production goes in alignment with BMW’s strategy to offer competitive prices while saving its import duties. He further emphasized over additional revenue streams from auto-financing, after-sales services, and sale of used cars.

Earlier last week, Bayerische Motoren Werke AG (ETR:BMW) announced sale figures for October 2014 with 184,297 deliveries at the global level with 11.1% growth in sales. The sale figure is much higher when compared with the total deliveries of 165,854 vehicles in October 2013. The company offer vehicles under three different models including BMW, MINI, and Rolls-Royce. The sale of BMW touched a new high with 155,120 deliveries in October.

Bayerische Motoren Werke AG (ETR:BMW) noticed sales growth of 20.3% in the Chinese market with 39,512 deliveries.

As of the now the primary rivals of BMW luxury cars in China include Lincoln from Ford Motor Company (NYSE:F), Mercedes Benz from Daimler AG (ETR:DAI), and Audi AG (ETR:NSU)’s flagship cars.

This article has been written by Prakash Pandey.

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