BMW Sticks to China Expansion Plans

SHANGHAI--German luxury car maker BMW AG is sticking to its plans to expand capacity in China and plans to produce three additional models in the country, despite the marked slowdown in the Chinese economy.

Munich-based BMW posted a 7.6% increase in sales in China in the first three months of the year and is in the process of expanding production capacity to around 400,000 cars a year by the end of 2016 from 300,000 now.

"Last year we sold 456,000 cars in China with capacity of 300,000 and now we are moving to capacity of 400,000," Ian Robertson, BMW board member in charge of global sales, told reporters at the Shanghai international auto show.

"At some point in the future, we'll look at it again."

BMW is currently making plans to produce three additional models in China, but Mr. Robertson remained vague on the details. The new models will include one of the company's X-Series sport-utility vehicles, currently manufactured in Spartanburg, South Carolina. The company will also add production of a multi-purpose vehicle and third model that Mr. Robertson declined to identify.

He said BMW is also planning to open its first casting plant outside Germany in China to manufacture a range of engines for its 3 and 5-Series cars.

Mr. Robertson said BMW has adjusted its production to changing demand in China several times, largely by shifting production on its assembly lines between models.

"We have a very flexible system," he said. "All our factories run at more than 100%."

Max Warburton, an analyst with Bernstein Research, wrote in a report published Monday that international auto makers were losing more ground in China than widely believed. He also said there were signs that local Chinese brands are staging a comeback in the market.

BMW has warned about uncertainties in China, but Mr. Robertson said international manufacturers still dominate the market and premium brands still have room to grow.

"We still see growth, though at a lower level," he said. "Premium demand is still growing."

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