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BMW expand engine production to China

05 Mar 2014


Automotive News China reports that BMW AG is seeking to close the gap with Audi AG by expanding engine production to China; this move has the potential to double capacity ans will increase local content in its Chinese made vehicles. In China BMW trails Audi in sales.

The new plant, which includes a foundry, will be located next to a BMW assembly plant in Shenyang's Tiexi district and replace an existing facility there. It will produce four-cylinder gasoline engines for locally built cars and start production in 2016 with initial capacity for 200,000 units, BMW said. In a joint-venture with Brilliance China Automotive Holdings Ltd. BMW plan to make as many as 400,000 engines a year.

The additional capacity will help BMW lower shipping costs and avoid taxes on imports. It will also reduce exchange-rate risks for the German manufacturer. BMW's sales in China rose 20 percent to 391,000 vehicles, while Audi delivered 492,000 cars, a gain of 21 percent.

The engine expansion roughly mirrors plans for auto assembly in China. BMW plans to increase production capacity there to as many as 400,000 vehicles in the coming years from 200,000 this year.

BMW restricted engine production to Europe until 2012, when it established an engine plant in Shenyang. The plant supplies engines to the BMW's joint-venture assembly plants in Shenyang.

Other German carmakers make engines in China. Daimler AG's Mercedes-Benz opened its first engine plant outside its home country in November.

The Mercedes plant cost 400 million euros (3.4 billion yuan) and can produce up to 250,000 motors per year. It manufactures four- and six-cylinder engines.

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