Dark Clouds Gathering Over China for BMW as the Germans Cut Production and Lower Prices

For the last five years or so, BMW and other luxury manufacturers have been making huge profits in China as the auto market soared to higher heights every year. And we’re talking double-digit increases here, things you wouldn’t see anywhere else in the world except, maybe, for some ultra rare occasions.
BMW Badge 1 photo
Photo: bmw
Not only that but the prices these companies practiced were also pretty steep, taking advantage of the newly found wealth of the Chinese customers. It’s all gone though, as the market started to slow down at the beginning of the year and continues to slow, turning CEOs in the most faithful people out there.

That’s because they are probably praying that things don’t go down south and just stabilize at a decent single-digit percent increase in sales. When they start cutting prices and decreasing the production rate of their cars, you know there are some issues at hand.

That’s exactly what’s happening now, as BMW is scaling back on its production in China, to keep dealership stocks low. On top of that, they are also reducing their prices, and we wouldn’t be surprised to see all sorts of special offers in the near future.

“We're adapting to the situation to make sure dealers are not overstocked. It's a little bit of a trend downwards. This is the new normal and we have to accept this, and we have to adapt to this,” Karsten Engel, BMW China chief said in an interview Monday at the Shanghai Auto Show.

BMW is not the only company to go through such issues lately. Ford and Volkswagen have already cut down their prices by up to 10 percent according to Sanford C. Bernstein & Co.

To counter this downfall, the Germans plan to introduce a Chinese-only sedan version that will be cheaper and smaller than the 3 Series is today. This way, it will appeal to a broader range of possible customers. If we were betting men, we’d say that it will also be FWD.
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