BMW Group to build second plant in China with Brilliance – Bavarian Auto Group plans new plant in Sudan

Shenyang/Beijing/Cairo - A few weeks ago the Bavarian Auto Group, the assembler of BMW and the BMW and MINI importer in Cairo, announced plans to open another factory in Sudan in an apparent step to compensate its stagnating sales numbers of BMW, Brilliance and Mahindra in Egypt. And while the Bavarian Auto Group tries to expand in Sudan, the BMW AG expands massively in the Chinese market.

At a ceremony held in Beijing on Thursday (12.11.2009), the BMW Group and Brilliance Automotive Holdings Limited signed a Memorandum of Understanding (MoU) to build a second production plant at the Shenyang site. The investment volume for the new plant amounts to 560 million euros. Construction work is scheduled to begin in 2010, with the start of production slated for early 2012.

“Brilliance Automotive Holdings Limited is a reliable joint venture partner with whom we have already worked successfully for more than six years. Our plant has reached its capacity limit – so we are now taking the next step. The decision to build a second plant demonstrates that we are investing in our future in China and that we intend to participate in the strong growth in the Chinese market,� stated Friedrich Eichiner, member of the Board of Management of BMW AG, responsible for finance and vice chairman of BMW Brilliance Automotive (BBA). “It is also an important strategic step towards reducing our exposure to currency fluctuations,� Eichiner added.

The joint venture has produced BMW 3 Series and 5 Series vehicles since 2003. A total of approximately 150,000 vehicles have so far rolled off the assembly line, with 450 million euros invested since the joint venture was founded. In a first step, the annual production capacity will be increased from 41.000 to 75.000 units. Upon completion of the second plant there will be a total annual production capacity of 100,000 units. Around 1,000 further jobs will be added to the 3,300 existing jobs in Shenyang.

China is the BMW Group’s fourth largest market. The company has maintained its growth in the country throughout 2009 and in October reported an increase of 81% over the same period last year to 9,558 units. The BMW Group sold 71,952 vehicles (52,622 / +36.7 %) in the first ten months of the year, already exceeding the retail volume for 2008 as a whole. Eichiner: “We are aiming to set a new sales record in China in 2009.�

In Egypt BMW assembles around 700 units annually. Those 700 units include the BMW 3 series, 5 series, 7 series and the BMW X3. Due to the financial and automotive crisis in Egypt, in addition to the free trade agreement with the European Union which sees an annual 10 % decline of customs until it reaches 0 % in 2019, it is expected that Bavarian Auto Group will be shutting down its plant in Egypt soon and look for other locations, such as Sudan.

It is worth mentioning that the BMW Group is one of the most successful manufacturers of automobiles and motorcycles in the world with its BMW, MINI and Rolls-Royce brands. As a global company, the BMW Group operates 24 production facilities in 13 countries and has a global sales network in more than 140 countries.

While BMW and its daughter-companies MINI and Rolls Royce enjoy a very good reputation in the Middle East and Gulf region, those three brands do not enjoy the same positive image and reputation in Egypt due mainly to several service problems, customer’s complaints and court orders against the Bavarian Auto Group in favorite of the Egyptian Consumer Protection Agency CPA.

The BMW Group achieved a global sales volume of more than 1.43 million automobiles and over 101,000 motorcycles for the 2008 financial year. Revenues for 2008 totaled EUR 53.2 billion, with earnings before interest and taxes (EBIT) of EUR 921 million. The company employed a global workforce of approximately 98,000 associates on 30 June 2009.

The success of the BMW Group has always been built on long-term thinking and responsible action. The company has therefore established ecological and social sustainability throughout the value chain, comprehensive product responsibility and a clear commitment to conserving resources as an integral part of its strategy. As a result of its efforts, the BMW Group has been, according to BMW, ranked industry leader in the Dow Jones Sustainability Indexes for the last five years.