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BMW to Reduce Costs by Sourcing Parts Locally
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German carmaker BMW AG plans to source more spare parts in China to lower local production costs in the world's third-biggest vehicle manufacturing country.

Alfred Rupp, president and CEO of BMW's car venture with Brilliance China Auto, said on Friday that its local parts purchasing volume would reach 3.6 billion yuan this year, up from 2 billion yuan in 2006.

"Our long-term strategy is to steadily accelerate local purchasing. This will not only actively respond to the government's local content requirement, but also improve the (cost) competitiveness of our products," Rupp said.

According to China's auto industry rules, the value of locally purchased spare parts should account for at least 40 percent of the total value of a foreign-branded vehicle made in China. Otherwise, import tariffs will be imposed.

But Rupp did not reveal the local content of BMW's 3 and 5 Series sedans made at the company in the northeastern city of Shenyang.

The venture, BMW Brilliance Automotive Ltd, plans to have 100 suppliers in China by the end of this year, up from over 60 at present, he said.

"All BMW Brilliance's local suppliers will have opportunities to enter BMW's global purchasing network," he said.

Meanwhile, Rupp said the venture will recruit an additional 20 authorized dealerships in China by the end of this year to boost sales. It now has more than 70 dealerships.

The venture has an annual production capacity of 41,000 units and sold 6,674 vehicles in the first quarter of this year, surging 43 percent from a year ago. Sales of all China-made vehicles climbed by 22.2 percent to 2.12 million units this year.

(China Daily June 23, 2007)

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