BMW is the latest global automaker to announce plans to create a special sub-brand for the Chinese market – but the German luxury giant is also eyeing its start-up as a possible source of exports.
We should hear more about the new Zhi Nuo brand at the Shanghai Auto Show later this month. BMW and its Chinese partner Brilliance Automotive are expected to introduced their first new model there, a version of the old 3-Series.
Since the Chinese automotive market began opening up a dozen years ago, it has been flooded by a Who’s-Who of foreign manufacturers. In turn, domestic makers have struggled to hang on, most of the successful ones by entering into joint ventures required by law of global manufacturers. But under pressure from the government, these JV operations have begun creating special local brands of their own.
General Motors and partners SAIC and Wuling have used their new Baojun brand to target first-time buyers in second-, third- and fourth-tier cities just beginning to feel the effects of China’s booming economy. Nissan and Dongfeng are taking similar steps with the new Venucia brand. Dongfeng has created yet another local brand, Ciimo, through its alliance with Honda.
So far, the secondary marques have been seen as purely local in nature. But perhaps the translation of Zhi Nuo – The Promise – suggests that BMW and Brilliance have some longer-term opportunities in mind.
According to reports in the Chinese press, the launch of Zhi Nuo was a requirement for BMW to gain approval for a second assembly plant in Shenyang. Government regulators have been using similar pressures on other makers to launch additional domestic brands.
Some reports from the booming Asian market suggest the old 3-Series will reappear as a Zhi Nuo, though other sources contend BMW will opt for the latest X1 as the basis for a new model. For his part, BMW’s global sales chief Ian Robertson declined to say what’s in store.
But he did give a hint of longer-term thinking in an interview with Automotive News, telling the trade publication, “Local brands have been largely directed at the domestic market. If I were the auto minister for China, I would say, ‘Well, where are our Hyundai and Kia?’ Out of that [requirement], I’m sure a couple will be successful.”
So far, the strong surge in Chinese sales has kept the vast majority of vehicles built in that country going to local dealerships. But there are many inside the industry who would like to shift direction – especially as there has been a modest loss of momentum in Chinese car sales lately.
A limited number of Chinese products are now available abroad, notably in Brazil. And several makers have been looking at major opportunities in both North America and Europe. During the recent Geneva Motor Show, in fact, one of the most popular displays was manned by Qoros, an unusual start-up operation formed as a joint venture between China’s Chery and Israel Corp., one of the Jewish state’s largest corporations.
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