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BMW Cuts Prices to Increase Sales

BMW, the German luxury car maker, yesterday slashed sharply prices of the sedans it makes in China to boost sales.


Prices of BMW 318i, 325i, 520i, 525i and 530i sedans plunged by 13 to 14 percent, or 50,000 yuan (US$6,040) to 100,000 yuan (US$12,080), the company said. The move is seen as part of BMW's efforts to revive its sagging sales in China.


The company sold 15,500 BMW brand cars last year in the Chinese mainland, down some 16 percent over 2003, said Christoph Stark, president and chief executive officer of BMW China Group.


Fifty-five percent of the sales came from BMW's joint venture with Hong Kong-listed Brilliance China Auto in Northeast China's Liaoning Province, and the rest from imports.


"We are making the price adjustment to be more competitive and play a bigger role in China's car market," Stark said.


"We will take measures jointly with dealers to unify prices of the same products everywhere in China and the prices will stay stable in the foreseeable future," he said.


Stark said that BMW is not the first luxury carmaker cutting prices in China and it would not participate in price wars.


Audi cut prices of its A4 and A6 sedans made in China by up to 60,000 yuan (US$7,200) last October.


Audi sold 62,000 cars in China last year, remaining the biggest luxury carmaker in the nation.


Asked whether the price cuts will damage BMW's brand image in China, Stark said: "Our brand image will advance with more customers buying our products (after the price cuts)."


"The market is so fluid in China. The competition picture is not really clear and developed. We will have a new major competitor starting local production in 2005, along with Volvo and Lexus as imports," he said, declining to reveal BMW's sales target this year in China.


Mercedes-Benz will begin making its E and C Class sedans in July at the joint venture between its parent DaimlerChrysler and Beijing Automotive Industry Holdings Corp with an annual production capacity of 25,000 units.


However, Stark said that prices of BMW cars may grow some time as a result of rising raw material costs and the strong euro.


"BMW's price cuts will add great pressure to the floundering Brilliance as the move could not increase their joint venture's sales volume sharply in a short period of time," said Li Chunbo, an analyst with Citic Securities Co Ltd.


Stark said that BMW plans to increase the number of its authorized sales and service outlets in China to 60 at the end of this year from 39 at present.


Brilliance closed at HK$1.42 (18 US cents) per share yesterday, down 2.07 percent.


(China Daily January 13, 2005)


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