Bmw to build new plant in Brazil to sustain global sales growth

Article by Christian Andrei, on December 19, 2011

A BMW AG plant will be put up in Brazil in order to sustain global sales growth after having achieved record deliveries in 2011. The world's biggest producer of luxury vehicles is looking for site for this factory, which is expected to boost sales to 2 million cars by 2020 from having sold 1.6 million this year, according to Chief Executive Officer Norbert Reithofer who spoke to reporters during a briefing near BMW’s Munich headquarters.

This February, BMW will present a new version of its top-selling 3-Series sedan. It predicts that sales will increase in the U.S., China and Europe next year, as long as the global economy does well.

At the recent briefing, Reithofer said that the company is more prepared for a crisis than when it had to get by during the recession in 2009 due to lower production costs and an enhanced financial cushion. He repeated that the 2011 profit will significantly increase to a record high and that automotive earnings before interest and taxes will both result to a minimum of 10% of sales.

BMW was thinking about constructing a factory in Brazil for several months now with the hope that it will attain balance growth and will make the company avoid being too dependent on a single market.

The company that produces BMW, Mini and Rolls-Royce vehicles seeks to defend its lead in the global luxury car segment from Volkswagen AG's Audi and Daimler AG's Mercedes-Benz.

BMW will conduct this expansion while there is an excess of cars in Europe as most companies continue their output even as sales have slumped and as there are worries that the economic slowdown will take place due to the sovereign-debt crisis. Research group IHS Automotive predicts that overcapacity in the region may increase by 41% to 2.92 million vehicles in 2012. [source: Bloomberg]

Topics: bmw, brazil, factory

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