Published: Sun, October 14, 2018
Finance | By Loren Pratt

BMW plans to take control of China joint venture

BMW plans to take control of China joint venture

This week BMW celebrated 15 years since it started a joint venture in China with Brilliance Automotive.

The German automaker announced on Thursday that it is increasing its stake in its joint venture with Brilliance China Automotive Holding to 75 percent from the previous cap of 50 percent.

Effective July 2018, access to full reports will only be available with a subscription.

Over the past decade, BMW rapidly expanded in China, selling 560,000 of its luxury BMW 3 Series sedans, X1 and X3 SUVs and other models in the country previous year.

"We are now embarking on a new era", BMW chief executive Harald Kruger said in a speech in the northeast Chinese city of Shenyang where the joint venture is based.

The agreement gives BMW a bigger say over its business in China, and lets it keep more of the earnings it generates in the massive market.

In addition, the Chinese government hope to see at least 20% of cars sold to be electric or rechargeable-hybrid vehicles by 2025. The transaction is expected to be closed in 2022, the year in which China would lift the ownership limit now existing on auto manufacturing operations.

China's auto market, the world's largest, has faced headwinds this year as the economy slows.

"If we do, we need to see what opportunities there are", Zetsche said at the Paris Motor Show, adding any steps depended on talks with BAIC Motor Corp, Daimler's partner in joint venture Beijing Benz.

It is expected that BMW Brilliance's annual production capacity will gradually increase to 650,000 units per year, and to create 5,000 new jobs.

While Brilliance is getting a hefty payment from BMW for the 25 percent stake, it is reducing its holding in a partnership that accounted for most of its profit previous year. The plants produced 400,000 vehicles past year.

BMW is one of the largest exporters of vehicles from the U.S. to China, putting the company in the crosshairs of a trade war which has seen the two countries increase tariffs on a massive amount of goods, including automobiles.

BMW said it will extend its partnership term with Brilliance Auto to 2040. Last year, China chose to open its markets after Western governments and companies pushed the Communist government to dismantle its trade barriers.

Like this: