BMW to take control of China joint venture for RM17 billion
14 October, 2018, 18:01 | Author: Eric Barnett
Alongside the deal, BMW will invest in new and existing plant facilities in Shenyang, increasing production capacity to 650,000 vehicles a year from the early 2020s.
Last year, BBA's factories in Tiexi and Dadong produced nearly 400,000 vehicles. In 2017, the BMW Group more than doubled its sales of electrified vehicles in China from the previous year and expects this growth to continue in 2018.
"Given the trade dispute between the USA and China, there is a powerful incentive for automakers to produce vehicles in the market where they sell them", said independent vehicle-industry analyst James Chao.
BMW and Brilliance have just signed an extension to their joint venture operations in China, with the new contract seeing the two automakers working together until 2040.
The deal will not be completed until 2022, when a law that prevents foreign vehicle makers owning more than a 50 per cent stake in a joint venture ends. The deal will be completed in 2022, when China plans to alter the rules governing partnerships in the automobile industry.
On Wednesday, Premier Li Keqiang said during a meeting with BMW's chief executive officer Harald Krueger that the deal showed "China will not change its opening-up policy, and instead will open up further and deeper", according to a story posted on the central government's website.
BMW plans to boost its manufacturing capacity in China and expand local production of new models, including electric vehicles.
Brilliance China Automotive Holdings are the whole owners of BMWBrilliance Automotive. The model will be sold in China and also exported to other markets.
BMW has been hit particularly hard by the US-China trade war with many of its SUVs imported from the US facing new 25 percent taxes, while cars imported from other countries have benefited from China's tariff cut for vehicles from 25 percent to 15 percent.
To support this push, foreigners can wholly own companies that build electric cars beginning this year, while restrictions for commercial-vehicle manufacturers will be eased in 2020.
"A smaller stake in the joint venture means less earnings contribution to Brilliance China and that's the only thing investors are sure of right now", said Angus Chan, Shanghai-based an analyst at Bocom International Holdings Co.
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