China’s rise no existential threat

The rapid rise and increasing threat of Chinese automakers did not accelerate BMW’s development of its next-generation Neue Klasse vehicle architecture, according to a key executive.

The German giant acknowledges the increasing presence of China in the global new-car market, but the advanced vehicle architecture was well under way by the time Chinese brands like BYD experienced growth in Europe.

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“At that time, I believe China was not the main reason to do that. We are coming from innovation, from technology, to say what is coming up for the future, what could be feasible, how we can be successful. Because we are BMW. We stand for innovation, for features, for functions,” he said.

“The second point is, for sure, we have seen that technology development, especially in China, go [at] a fast speed. And to be successful also in that market, technology integration is very important. It's a competitive market. And there are some cars from China coming up which are good cars, which, let's say, it is good that we have made a decision to be on the technology jump and to be prepared for that.

“And let me say I won't be in a situation like others, to be not prepared in that matter for the whole fleet like some others are.”

China is BMW’s largest market by volume with total sales equalling between 20 and 30 per cent of the Group’s total sales spending on the year. It is a bigger market than the US and Germany.

Post denied that Chinese carmakers presented an existential threat to BMW, and compared the country’s rise to that of Korean brands decades earlier.

“Looking a lot of years ago in Europe, where the Korean brands came to Europe, same discussion. And finally, to be competitive in the market, to have attractive product, attractive features, functions… and have heritage on a brand is important, and we will see what's coming up.

“The Chinese are going abroad, especially Asia. They will also come to Europe. But to be honest, they also have to earn money for the future. And when you look at what's going on in the Chinese market, not all of them are really earning money. And they have a reality when they come to Europe… and we will see what's coming.”

At the same iX3 reveal event, BMW Board Member for Production, Milan Nedeljkovic, highlighted the differences in cost between manufacturing in China compared with Europe.

“It has four or five relevant factors, which make economic difference between Europe and China. One, of course, is the cost level of salaries and people in fact, but more significant is even the price of energy. So how much do we pay for energy and secure price levels for long-term investment in salaries?

“Secondly, it's access to raw materials and to refined raw materials. It's not about the mining. It's about refining. And China has significant capacities in refining raw materials. So to bring these raw materials back to Europe is rather ineffective, instead of getting it manufactured in China and having to finish it. So there are some advantages, which China has, and you can see it in the competitiveness of China when it comes to electric mobility in the pricing.

“Nevertheless, at the same time, there are investments in Europe, also from Chinese companies and others, which show that if you want to be successful in the market, you must be in the market. It's not about import/export. It's about being part of the ecosystem of a region. That's why we have our footprint worldwide, and that's why all the other global players have a diverse manufacturing system to cover the main regions.”

BMW Group has four main factories in China with its domestic partner, Brilliance, and one of the facilities - Dadong - was the company’s most production plant in 2023.