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BMW Unveils Plan to Boost Production in China

Oliver Sachgau
A BMW AG badge sits on the hood of an X5 vehicle at a BMW manufacturing plant in Pluak Daeng, Rayong Province, Thailand, on Tuesday, May 3, 2016. Photographer: Dario Pignatelli

BMW AG is increasing capacity at two car manufacturing plants in China in a move that comes just days after U.S. President Donald Trump started a trade war with the Asian nation.

BMW and Chinese partner Brilliance Automotive Group Holdings signed an agreement Monday to expand their joint venture BMW Brilliance Automotive, the German automaker said in a press release. The deal will boost the number of cars they produce at two facilities in China to 520,000 annually in 2019. BMW had set a target last year for making 450,000 cars a year in the country. It declined to say how much the boost will cost.

BMW’s expansion in the Chinese market follows the imposition by Trump of a 25 percent additional tariff on $34 billion of Chinese imports, a move that triggered an immediate response from Beijing and marked the first steps in an escalating trade tussle between the U.S. and other countries. The move by BMW also coincides with plans outlined by Chinese authorities in April to ease foreign-ownership restrictions in the country, with the possibility that foreign automakers could eventually buy out their local partners.

“Our agreement sets a long-term framework for our future in China - a future involving continued investment, further growth and a clear commitment to the development and production of electric vehicles,” BMW CEO Harald Krueger said in the statement. He also said the carmaker is considering delivering other Chinese-made cars outside of the country.

BMW’s joint venture with Brilliance produces all of the carmaker’s models sold in China -- including 1,3 and 5-Series cars, as well as the 2-series active tourer and the X1 sports utility vehicle. The company started producing its X3 sports utility vehicle in China in May, and also plans to make the iX3 electric SUV there starting in 2020 that will be sold on the local market as well as for export.

Read BMW Unveils Plan to Boost Production in China on bloomberg.com