Brilliance China's profits jump 85% in first six months
Brilliance China Automotive Holdings Ltd., the Chinese partner of BMW AG, said first-half profit rose 85 percent as China's rising incomes spurred demand for luxury cars.
Net income was 941 million yuan ($147 million) in the first six months, compared with 509 million yuan a year earlier, the company said in a statement.
Sales fell 38 percent to 3.2 billion yuan after a unit stopped reporting the value of components as part of revenue and minibus deliveries declined.
Brilliance, which assembles BMW's 3 and 5 series sedans in China, is benefiting as premium-car sales outpace growth in overall vehicle deliveries. The Shenyang, northeast China-based automaker aims to triple its capacity for BMW vehicles to 300,000 from the end of this year to 2013 by expanding a factory in the city and building a new plant.
"We like BMW's China growth story and believe the ongoing capacity expansion in Shenyang, coupled with new models will support Brilliance's superior growth," Ronnie Ho and Candy Tai, Hong Kong-based analysts at CCB International Securities, wrote in an Aug. 4 report.
"Consumers need to wait two to three months for all 5-series models in China as demand outstrips production," Chairman Wu Xiaoan said in a briefing in Hong Kong.
Strong sales growth is expected to extend to next year, he said, without being more specific. Brilliance plans to export made-in-China BMW 5-series sedans to the Middle East from November, he said.
BMW's share of China's luxury sedan market has increased in the past five years, closing in on Audi AG, according to Munich-based Roland Berger Strategy Consultants.
This year, BMW's market share has risen to 24 percent, up from 21 percent in 2006. Audi's has declined to 28 percent from 50 percent, said John Shen, Shanghai-based partner at the consultant. BMW's first-half sales in China rose 61 percent to 121,614 units, outstripping the 3.4 percent growth for the overall industry.
Brilliance will have 270 BMW dealerships by the end of the year, up from 210, Lei Xiaoyang, a non-executive director, said at the briefing.
Brilliance also builds minibuses with Toyota Motor Corp. in China. Minibus sales fell 11 percent in the first half to 43,424 units after the removal of tax incentives for vehicle purchases and registration restrictions were put in place to curb traffic, Brilliance said.