BMW to invest 735 million dollars in China

BMW to invest 735 million dollars in China Beijing  - German auto firm BMW AG on Thursday said it planned to invest 5 billion yuan (735 million dollars) to expand its joint-venture production in China.

BMW said it would use the investment to build a second plant in the north-eastern city of Shenyang to increase its annual production to 300,000 vehicles in China.

It signed an agreement in Beijing with Chinese partner Brilliance Automotive Holdings Ltd for the largest single foreign investment in China.

The two firms currently produce several BMW series-3 and series-5 models in Shenyang, where they are scheduled to start building the second plant next year.

BMW's agreement comes as China's total vehicle production and sales are forecast to reach 12 million units this year, making it the world's largest car market.

BMW and other foreign car firms are drawn by statistics showing that China's 1.3 billion people still own just 34 vehicles per 1,000 people, compared with more than 500 cars per 1,000 people in many developed nations.

More than 90 Chinese and foreign vehicle brands are already competing in China, offering about 400 models, according to US auto analyst JD Power.

But with most major manufacturers of passenger cars planning rapid expansion of production, officials have warned that the excitement in China's auto industry might be encouraging overexpansion that could lead to a glut of cars. (dpa)