BMW Group and Brilliance sign joint venture contract for planned production in China

Munich / Beijing. The BMW Group and Brilliance China Automotive Holdings
Limited today signed a contract for a production and distribution joint
venture in China at the Great Hall of the People in Beijing. The
signing paves the way for the planned local production of BMW cars in
Shenyang, the capital of Liaoning Province in the North-East part of
the People's Republic of China. The contract was signed by Dr. Helmut
Panke, Chairman of the Board of Management of BMW AG, together with Mr.
Wu Xiao An, Chairman of Brilliance China Automotive Holdings Limited.
Top ranking officials from relevant ministries in Beijing, Governor Bo
Xilai of Liaoning Province, German Ambassador Mr.
Broudré-Gröger and senior executives from both parties
witnessed the signing of this milestone contract. "The joint
venture in China is a crucial step for the BMW Group", said Dr.
Panke. "This will allow us to consistently expand and strengthen
our position in one of the most important automobile markets of the
future. We will offer authentic premium products to our customers in
China, characterised by emotional appeal, uncompromising engineering,
innovative technology, and high quality workmanship." Mr. Wu
said: "This joint venture between Brilliance and the BMW Group will
allow both parties to tap into the vast potentials of the fastest
growing automotive market in the world while giving many more Chinese
consumers the opportunity to enjoy the renowned qualities of BMW Group
products. The foundation of the joint venture is also a milestone for
the Chinese automotive industry since it will set new standards for the
production of automobiles and related services." The written
approval of the jointly prepared feasibility study was received from
the State Development and Planning Commission on March 14 2003. The
final stage in the procedure leading to the official foundation of the
joint venture is the approval of the joint venture contract and the
granting of the business license by the government authorities. The
joint venture will engage in the production, sales, and after-sales
service of premium automotive products of the BMW Group. The start of
production is planned for the second half of 2003. In the medium term,
an annual production of around 30,000 BMW 3 Series and 5 Series
vehicles is envisaged. In Shenyang, the joint venture will incorporate
essential parts of the new plant built in 1999 by Brilliance Auto,
expanding these local operations into a fully-fledged production
facility in line with the high BMW Group standards of quality
worldwide. The BMW Group and its Chinese counterpart each will hold a
50% share in the joint venture. A total of 450 million euros is to be
invested by 2005. In the medium term, the joint venture will employ
approximately 3,000 staff. The local supplier industry is continuously
being expanded. For the first generation of vehicles produced in China,
local content of approximately 40 per cent is expected. The dealer
network will be adapted continuously to the production volume. The BMW
Group regards the joint venture as a new milestone in its process of
internationalisation. On the basis of its ongoing market offensive, the
company is consistently strengthening its global presence and
strategically opening up new markets, particularly among the rapidly
growing markets in Asia. Today, the sales network of the BMW Group
consists of 27 own sales subsidiaries and some 3,000 dealerships around
the world. Smaller markets are currently served by more than 100
importers. The BMW Group is represented in over 120 countries on all
five continents. In addition, the company operates 23 production and
assembly plants in 14 countries, including 5 in Asia (Malaysia,
Vietnam, the Philippines, Indonesia and Thailand). No other premium
manufacturer has recourse to such an internationally oriented network of
production and sales. With the joint venture in China, the company is
adding a central pillar in Asia to this network, hence consistently
implementing its Asia strategy. Over the next five years, the company
is planning to increase its annual sales in Asian markets from around
80,000 to 150,000 units. The company is continuing on a path of ongoing
growth in China; customer deliveries increased in 2002 by 41.4 per cent
to 15,500 vehicles (the Chinese mainland, Hong Kong and Taiwan
markets). Following the USA and Germany, these markets have now become
the third largest sales region for the 7 Series in the 2002 financial
year. In the first quarter of 2003, the BMW Group expects a sales
volume of around 4,400 BMW and MINI vehicles in Greater China, an
increase of nearly 30% compared to the equivalent period 2002. The BMW
Group anticipates a continuing upward trend particularly in the premium
segments in China in the years to come. Brilliance is convinced that
its partnership with the BMW Group is an important move in its strategy
to transform the company into a fully-fledged automobile manufacturer
in China. The company believes the Chinese automobile industry will
play a critical role in the future development of the global car market.
Brilliance states: "We are fully committed to the partnership with
the BMW Group since the BMW Group has demonstrated commitment to China,
and it has unparalleled strength in the development, production and
sales of premium vehicles. Moreover, the BMW brand is among the most
desired premium brands in China."