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Germany’s BMW planning assembly plant in Brazil to cater Mercosur luxury car demand

CEO Norbert Reithofer said BMW targets full year sales of 1.6 million units

German automaker BMW said this week it would probably build its first assembly plant in Brazil after strong demand for luxury cars generated stellar earnings for the global leader.

Chief executive Norbert Reithofer said he saw a “high probability” that BMW will build a factory in Brazil to supply Mercosur, one of the most dynamic auto markets in the world.

The decision will be made later this year, Reithofer added after BMW posted a second quarter net profit of 1.81 billion Euros, more than double that of the same period a year earlier. Sales were 16.5% higher at almost 17.9 billion Euros.

“We expect the business environment to remain favourable during the second half of 2011,” the company said in a statement.

BMW's second-quarter operating profit soared meanwhile by 66.3% to 2.86 billion Euros. The group, which also owns the Mini and Rolls-Royce brands, sold a record 450,608 vehicles over the three-month period, an annualized gain of 18.5%. For the first six months of the year, sales jumped 19.7% to 833,366.

BMW issued a new full-year target in July of more than 1.6 million sales.

BMW dealers have been delivering more cars worldwide, but especially in China and the rest of Asia, the industry's global growth engine. China now represents almost 15% of the group's total sales, a level close to that of Germany itself.

“We are looking more and more in the direction of the BRIC countries,” Reithofer commented in reference to Brazil, Russia, India and China.

German rivals Daimler, which owns Mercedes, and Volkswagen, which owns Audi, published solid quarterly results last week as well and raised their annual forecasts despite concern over debt problems in Europe and the United States.