BMW's updated strategy to seek further growth in Chinese market

German premium carmaker BMW is scaling up production in China, its largest market, with the expansion of one of its plants and two new facilities scheduled to become operational in 2022.

BMW unveiled the plan last week in Beijing as it updated its strategy for China, where it said it feels "at home" and sold over one-third of its 1.93 million deliveries globally in the first three quarters of this year.

The carmaker said the updated strategy, which prioritizes the China market, will enable it to respond quickly to market changes, especially taking into account Chinese customers' expectations at an early phase of vehicle development.

BMW is currently producing 13,000 vehicles a week at its BMW Brilliance joint venture in Shenyang, Liaoning province, including the X1, X2 and X3 SUVs and the 1, 2,3 and 5 Series sedans.

They will soon be joined by the flagship X5 SUV. It will be the most advanced and sophisticated premium vehicle the carmaker will produce in the country.

The X5 currently sold in China is made in South Carolina in the United States. The China-made one will be tailored for the Chinese market, including having a longer wheelbase and more legroom for back-seat passengers, according to the carmaker.

Analysts said local production could knock at least 10 percent off the car's current sticker price as there will be lower shipment costs and no tariffs.

BMW will also produce the electric 3 Series sedan in China, said Nicolas Peter, a BMW board member responsible for finance and China affairs.

In all, the company will offer five electric vehicle modes in China in 2022 and the figure will rise to around 13 by the end of 2023.

"BMW's success in internal combustion engines has fully displayed "the importance it attaches to the Chinese market, and the BMW Group will continue to deepen its "China first" approach in electric vehicles, it said in a statement.

Liu Liang, a Shanghai-based auto analyst, said it is logical for international carmakers to deepen their localization in China as they go electric, because China has the largest market for electric cars and plug-in hybrids, and the most tech-savvy customers.

Sales of those vehicles totaled 2.99 million in China in the first 11 months of this year, according to the China Association of Automobile Manufacturers.

Ouyang Minggao, an automotive professor at Tsinghua University, estimates the figure could reach 5 million in China in 2022, as Chinese carmakers and international brands vie to introduce more models to the nation's market.

Other carmakers, including Mercedes-Benz's parent firm Daimler, are accelerating efforts to grow their share of China's new energy vehicle market.

Daimler produces and sells three electric vehicle models in China, and another one is to join them in 2022.

"There is no doubt in my mind that China will play an important role in the future of our industry," said Hubertus Troska, a board member of Daimler and Mercedes-Benz responsible for operations in China.

China is Daimler's largest market globally, with its cumulative deliveries reaching around 5 million in the country. Its production facilities in Beijing are the biggest in the carmaker's global manufacturing network.

"The Chinese market has seen an incredible success story over the last 20 years," said Troska, who has lived in China for around a decade.

"Guided by our vision to 'grow in China with China', we are honored to have participated in this momentous development, while making sure to give back to Chinese society," he said.