VIENNA – Bavarian Auto Group, the Egyptian assembler of BMW AG cars, will begin producing Brilliance China Automotive Holdings Ltd. cars from complete-knocked-down kits in late 2005.

“The contract was signed on April 15, and we will need six to eight months to launch the assembly of the Zhonghua M1,” says Ulrich Urban, Bavarian Auto CEO and partner.

Bavarian Auto will assemble Zhonghua M1 and M2.

In addition to the M1, assembly of the new Zhonghua M2 is to be added a few months later. Chinese production of the Zhonghua M2 is expected to be launched this October. (See related story: Chinese Zhonghua Cars Headed for Europe)

The investment needed for the Zhonghua assembly and distribution activities should fall between $7 million and $10 million, Urban says.

“We plan to assemble 2,500 M1 and M2 cars in 2006,” Urban says.

The cars will be built alongside BMWs at the company's 419,796-sq.-ft. (39,000-sq.-m) Bavarian Auto Mfg. plant, located in 6th of October City.

Zhonghua cars will be sold in 12 Egyptian dealerships. In addition to the local market, Urban also plans to export Egyptian-built cars to the Common Market for Eastern and Southern Africa (COMESA) countries.

The company also has import rights for minibuses made by Brilliance China Automotive Holdings Ltd.

According to Urban, it is not decided yet whether the minibuses will be assembled locally or brought in as completely built up imports.

Bavarian Auto, a joint venture of investors from Gulf countries, Egypt and Germany, launched BMW assembly in May 2004. About 1,100 BMW 3-Series and 5-Series cars were built last year. Plans call for that to more than double to 2,300 BMWs in 2005. Assembly of the BMW X3 cross/utility vehicle is to be added into the mix at the end of this year.

Some of the Egyptian-assembled BMWs are expected to be shipped into the COMESA countries, with Sudan being the first export market.

The company also is considering importing smaller cars. There are negotiations under way with Fiat Auto SpA, which is looking for a new importer in Egypt. Imports of another Chinese brand also are possible, Urban says.