Azernews.Az

By Bloomberg

Bayerische Motoren Werke AG has reduced some prices and will cut production in China to placate dealers, a sign that luxury demand in the world’s largest auto market is softening.

BMW has scaled back manufacturing in the country to lower supply for its distributors and will also cut output in the second quarter, according to Karsten Engel, BMW’s China chief, who declined to give specifics.

“We’re adapting to the situation to make sure dealers are not overstocked,” Engel said in an interview Monday at the Shanghai auto show. “It’s a little bit of a trend downwards,” he said. “This is the new normal and we have to accept this and we have to adapt to this.”

Foreign automakers including Ford Motor Co. and Volkswagen AG have cut prices by much as 10 percent in recent weeks, with growth in international brands slowing almost to zero, according to Sanford C. Bernstein & Co. Demand for luxury products has also been hit as an austerity and anti-corruption drive under Chinese President Xi Jinping extends into its third year.

BMW was trading up 1 percent at 11:42 a.m. in Frankfurt, receding from a jump of as much as 2.2 percent. The stock has gained 24 percent this year, valuing the Munich-based carmaker at 71.7 billion euros ($77.2 billion).

Sport-utility vehicles and compact cars will be the main growth areas in China for the German company, said Engel. BMW will build and sell a China-only sedan marketed below the 3- Series, he said.