SHANGHAI -- BMW AG has reduced prices on some models in China and will cut production in the country to prevent a buildup of unsold cars in 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 cut output again in the second quarter, said Karsten Engel, BMW's China chief, who declined to give specifics.
The German company is adjusting to "a little bit of a trend downwards," Engel said in an interview Monday at the Shanghai auto show. "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.
The company, the world's biggest maker of luxury vehicles, ranked second in Chinese deliveries last year among the top three global premium auto brands, with Volkswagen's Audi division staying No. 1, a lead it has held for about a quarter of a century, and Daimler AG's Mercedes-Benz placing third.
At the Shanghai show, BMW staged the world premiere of the X5 plug-in hybrid, along with the Asian or Chinese debuts of its 2-Series Gran Tourer wagon and convertible and coupe variants of the 6-Series.
Mercedes is displaying a "near-production" prototype of the GLC compact SUV coupe at the show. Daimler CEO Dieter Zetsche predicted in early April that Mercedes will have "tremendous opportunities" in China because of new models and first-time buyers' tendency to opt for an upscale car or light truck.
SUVs and compact cars will be BMW's main growth areas in China, said Engel. BMW will build and sell a China-only sedan marketed below the 3-Series, he added.