By Scott Hillis
BEIJING, March 27 (Reuters) - BMW AG said it will sign a deal on Thursday with Brilliance China Automotive Holdings to produce the German luxury cars in one of the world's fastest-growing car markets. Under the long-awaited deal, BMW and Brilliance, China's largest van maker, will invest 450 million euros ($480 million) in the venture by 2005, with each side holding a 50 percent stake, BMW said in a statement.
"The joint venture in China is a crucial step for the BMW Group," BMW Chairman Helmut Panke said in a statement. "This will allow us to consistently expand and strengthen our position in one of the most important automobile markets of the future."
The venture -- to be formalised at a signing ceremony in Beijing's Great Hall of the People -- will make cars at a Brilliance factory in the northeast city of Shenyang, with production starting in the second half of this year.
It would make some 30,000 3 Series and 5 Series cars a year in the "medium term", BMW said.
China's red-hot auto market saw sales soar 60 percent last year to 1.2 million cars, becoming the world's fourth biggest automotive market behind the United States, Japan and Germany, according to market research firm Automotive Resources Asia.
STRONG REPUTATION
Foreign car giants have rushed to get a slice of the China market, with Ford Motor Co of the United States and Japan's Toyota Motor Corp among the latest to start rolling cars out of domestic factories.
BMW exported about 7,000 cars to China last year, according to Automotive Resources. It faces competition from Volkswagen AG's Audi, which makes about 35,000 cars a year in China through a venture with First Auto Works, China's top automaker.
While China's auto sector has been boosted by a spurt of new economy models hitting the market, more Chinese are also eyeing up-scale cars.
Of the 70,000 cars China imported last year, most cost around 400,000 yuan ($48,300), showing a strong appetite for high-end models, said Automotive Research analyst Yale Zhang.
And BMW's reputation for melding performance and luxury was making inroads with Chinese consumers, Zhang said.
"Chinese are similar to people in the United States or Europe as to how they perceive this brand. BMW's performance, the fun of driving, and the quality, together with this image, make them really well received by Chinese," Zhang said.
The move is the latest expansion into Asia by the German carmaker, which has factories in Malaysia, Vietnam, the Philippines, Indonesia and Thailand, and aims to double its Asian sales over the next five years.