Bloomberg News

BMW Factories Work Over Time on Strong Demand for X3, X1 Models

October 28, 2011

Oct. 28 (Bloomberg) -- Bayerische Motoren Werke AG, the world’s biggest maker of luxury cars, is operating factories at more than 110 percent of capacity on record demand for models like the X3 and X1 sport-utility vehicles.

BMW plans to make a decision to add new production facilities in growing markets, including Brazil, as it aims to lift sales to 2 million vehicles a year by 2020 from a target of 1.6 million this year, Frank-Peter Arndt, the carmaker’s production chief, said today in Munich. The company aims to increase output further next year with the introduction of the revamped 3-Series sedan, he said.

“We are a business that aims for permanent and long-term success,” Arndt said at an event marking the start of production of the 35,350-euro 3-Series sedan. “We will seek in 2012 to exceed these successful levels of 2011.”

BMW is hoping that the sixth generation of its best seller will preserve its lead over Volkswagen AG’s Audi and Daimler AG’s Mercedes-Benz, which have both set their sights on the overtaking the Munich-based manufacturer. BMW is investing more than 1 billion euros ($1.42 billion) in factories in Germany and South Africa to produce the vehicle.

The maker of BMW, Mini and Rolls-Royce vehicles plans to expand production at plants in Russia, India and Thailand, where it assembles parts produced elsewhere, Arndt said. The annual capacity at a factory in Chennai, India, will double from the current 20,000 units, he said.

Even with the growth plans, BMW is prepared for a potential slowdown in demand and can reduce production volumes by 20 percent to 30 percent if necessary, Arndt said. BMW measures full capacity at a plant based on two eight-hour shifts, staffed five days per week and 47 weeks per year, according to the executive.

BMW is scheduled to report earnings for the third quarter on Nov. 3. The manufacturer is expected to report a 32 percent increase in earnings before interest and taxes of 1.57 billion euros, based on the average of 14 analyst estimates compiled by Bloomberg.

--Editors: Chris Reiter, Tom Lavell

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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