Alarm bells are ringing at BMW’s largest production center.The giant automaker is cutting production to cope with falling sales figures and rising cost pressures.
BMW cuts production for China plant
BMW is taking unexpected steps at its largest production base in the Shenyang region of China. The German automotive giant has been cutting production and giving workers long vacations since the beginning of the year. According to reports from China, production line workers are working only two weeks a month. It was also reported that the contracts of employees with less than three years of service will not be renewed.
One out of every three BMWs worldwide is produced in Shenyang. The Tiexi and Dadong plants have a total production capacity of 830 thousand vehicles. The Tiexi plant produces the 1 Series, 3 Series, X1, iX1, X2 and i3 models. Accordingly, it produced approximately 307 thousand models last year alone. The Dadong plant, on the other hand, produced 420 thousand vehicles last year, focusing on high-end models such as the 5 Series, X3, iX3 and X5.
BMW announced in July that it was withdrawing from the price competition in China and would focus on profitability in the second half of the year. This strategy was also reflected in the sales figures. The company’s sales in China fell 13 percent to 520 thousand vehicles in the first three quarters of the year.
In August, when the “reduce production and maintain price” strategy was implemented, sales fell by almost half to 37 thousand units. The latest production cuts indicate that the difficulties in the Chinese market will continue.
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