Automotive BMW is trying to grab elite fleet deal from Audi


by BENJAMIN HUDSON - Date: 2007-04-03 - Word Count: 597 Share This!

In Beijing: There is race raging on between German luxury-car maker BMW and Audi and it's not on the road but more of a contest on who will get the approval of the high-ranking Chinese government officials.

BMW is hoping that it will be chosen over its rival Audi. To accomplish such objective the Munich-based company is currently engaging in talks with regulators to include its vehicles on the government's shopping list said Christoph Stark, president and chief executive officer of BMW Group China in an interview with China Daily. Stark also added, "The government purchase sector is important for us and we have the confidence to enter it. We'll try to explore the possibility of more customers, such as government institutions and state-owned companies."

Stark made such remarks after another German luxury car maker Mercedes-Benz's China-made sedans make it to the government purchasing list this month. It should be noted that it was in the year 2003 that BMW began assembling its 3 and 5 series sedans in partnership with Brilliance China Auto in northeastern city of Shenyang. Most of its buyers are private Chinese customers.

Last November, the BMW China launched its new 5 series sedans that measured 14 centimeters longer than the previous models and are specially manufactured for the China market. Such move was part of BMW's efforts to penetrate into the government-purchase sector. BMW is not the only exploring this fast-growing segment other foreign and domestic car makers are also riding on the bandwagon. Basing on the gathered industry data, governments at all levels in China last year spent 70 billion yuan or $9 billion USD in buying vehicles.

Audi--Volkswagen's luxury unit and recipient of quality auto components like VW spark plugs-has started its China production in the early 1990s and from then on has started dominating the fleet serving high-ranking government officials with its hot-selling A6 sedans. This has helped Audi in boosting its sales in China since elite consumers were finally been able to notice the Audi brand.

Audi's sales in mainland China reached 80,808 units last year an increase of about 39% from 2005. On the other hand BMW's mainland sales increase by 51 percent to 36,357 units including 22,550 locally made 3 and 5 series sedans. Mercedes-Benz's was also able to sell 21,000 cars on mainland China and in Hong Kong last year and obtained an increase of 32%. It also started the assembling of its E-class sedans at the beginning of the year in Beijing.

According to Alfred Rupp, CEO of BMW's venture with Brilliance said that the ventures has helped it annual production to increase capacity of up to 41,000 units from 30,000 to meet the growing demand. "We can raise capacity further by improving processes."

He also said that the venture will find 80 first-tier suppliers in China by the end of this year up from the present 50. Procurement of locally made spare parts will also be increased to 3 billion yuan from the 2 billion yuan in 2006.

Stark is also denying reports that are stating that the German car maker is searching for a second partner in China. He said, "BMW and Brilliance are satisfied with the venture's performance." The luxury car sales in China last year reach 160,000 units which is less than 4 percent of the entire nation's passenger car sales. Analysts predict sales to increase rapidly as the number of rich buyers in China also increases. Sales of China-made vehicles have risen to 25 percent to 7.22 million units last year including the 4.2 million passenger cars.


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