German luxury car maker BMW on Tuesday said it has increased capacity at its Chennai facility to 10,000 units from the beginning of this month as it looks to meet increased demand and retain the number one position in India.

“BMW’s plant in Chennai has increased production capacity to 10,000 units (per year) in a single shift operation from 8,000 units effective March 1, 2011,” the company said in a statement.

Last year BMW retained its number one position in the Indian luxury car segment with sales of 6,246 units, which was up 73 per cent from the previous year.

It had beaten rival Mercedes Benz, which clocked sales of 5,819 units in 2010, a growth of 80 per cent.

BMW also said it will also launch the new version of sports utility vehicle (SUV) X3 by the middle of this year.

The new BMW X3, which will be imported as completely knocked down units will be assembled at the Chennai plant, it added.

At present, the company assembles sedans 3 Series, 5 Series and SUV X1 at the plant.

In December last year, BMW launched its globally popular sports utility vehicle X1 in December with the petrol option priced at Rs. 22 lakh (ex-showroom, all-India) and the diesel variant having two options priced at Rs. 23.9 lakh and Rs. 29.9 lakh (ex-showroom, all-India).

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