Brilliance aims to drive BMW sales

PUBLISHED : Tuesday, 29 March, 2011, 12:00am
UPDATED : Tuesday, 29 March, 2011, 12:00am

Brilliance China Automotive Holdings is targeting 40 per cent sales growth for its Shenyang-made BMW sedans this year after last year's blockbuster growth led to record turnover and profits.

The mainland joint venture partner of the German luxury carmaker is targeting sales of 100,000 units this year. That would be an increase of 42 per cent on last year's record sales of 70,488 units, which in turn was up 57 per cent from 2009.

Brilliance expects this year's sales to be driven by expansion of its retail network. The company plans to increase it total number of dealerships and showrooms on the mainland to 270 outlets by December, up from 210 outlets at the end of last year.

But it expects even more growth to follow next year, when a major expansion to the company's production facilities begins coming online towards a goal of tripling annual output capacity to 300,000 cars by 2013.

'For the past few years we have been capacity-constrained and have been unable to keep up with the demand in the market,' Brilliance chairman Wu Xiaoan said yesterday. 'We are confident that our growth prospects will be better than those of our competitors.'

Brilliance swung to record net profit of 1.27 billion yuan last year, compared with a loss of 1.64 billion yuan in 2009. The profit figure was 16 per cent higher than the 1.09 billion yuan forecast in a Bloomberg survey of analysts.

The dramatic turnaround was due to booming BMW sales on the mainland and the company's decision to sell off its loss-making Zhonghua sedan unit. Turnover rose 45.5 per cent to 8.95 billion yuan last year.

Brilliance also makes the Jinbei microvan, or mianbaoche, in partnership with Toyota.

Brilliance's BMW venture is competing in one of the fastest growing segments in the mainland's booming car market against the likes of Audi's partnership with FAW in Changchun and Beijing Automotive Industry Corp's tie-up with Daimler's Mercedes-Benz in Beijing.

Luxury car sales on the mainland rose 48 per cent last year, outpacing the broader market's already soaring growth and ranking as the second-fastest growing segment after SUVs. Brilliance's most popular model is the BMW 5 series sedan, which retails from over 400,000 yuan (HK$474,000) and comes in standard and extended wheelbase versions.

The joint venture also produces the BMW 3 series, which sells from 280,000 yuan. It plans to launch local production of the BMW X1 SUV and a new generation of the 3 series in 2012.

The company sources about 50 per cent of the parts locally for the BMW models it produces. The management expects the localisation ratio to rise further in 2013 when a new engine plant with an annual capacity of 100,000 units comes online, boosting profit margins for the group. Currently, all its BMW engines are imported.

Shares in Brilliance fell 2.87 per cent before yesterday's results announcement to close at HK$6.77 apiece. They have risen 14 per cent this year against a meagre 0.14 per cent gain in the Hang Seng Index.