BMW to ac­quire 75% stake in JV

China Daily (USA) - - BUSINESS - By LI FUSHENG li­fusheng@chi­nadaily.com.cn

Ger­man car­maker the 1st ben­e­fi­ciary of pol­icy to open auto in­dus­try wider

BMW AG said it plans to take a ma­jor­ity stake in its Chi­nese joint ven­ture, the first move by a global car­maker to seek con­trol of lo­cal part­ner­ships in China as the coun­try opens its au­to­mo­tive sec­tor wider.

It has reached an agree­ment with Bril­liance China Au­to­mo­tive Hold­ings to raise its eq­uity in their joint ven­ture to 75 per­cent from the cur­rent 50 per­cent, ac­cord­ing to a state­ment the Ger­man pre­mium car­maker is­sued on Thurs­day.

The trans­ac­tion, which is val­ued at 29 bil­lion yuan ($4.16 bil­lion), is ex­pected to be com­pleted when the Chi­nese au­thor­i­ties re­move lim­its on for­eign own­er­ship in pas­sen­ger car joint ven­tures in 2022.

China an­nounced in April the phas­ing out of all eq­uity caps in the au­to­mo­tive in­dus­try within five years, with those on new en­ergy ve­hi­cle firms hav­ing been re­moved this year.

BMW’s eq­uity change will help boost its devel­op­ment in the coun­try, its largest mar­ket world­wide, af­ter 15 years of lo­cal­ized pro­duc­tion at its joint ven­ture BMW Bril­liance Au­to­mo­tive.

With two plants in Shen- Har­ald Krueger, yang, cap­i­tal of north­east­ern China’s Liaoning province, the joint ven­ture is pro­duc­ing six BMW mod­els, with their com­bined pro­duc­tion to­tal­ing 400,000 ve­hi­cles last year.

Con­struc­tion of a new plant started in Tiexi dis­trict of Shenyang on Thurs­day, which re­ceived con­grat­u­la­tory let­ters from Premier Li Ke­qiang and Ger­man Chan­cel­lor An­gela Merkel.

“BMW AG has be­come the first ben­e­fi­ciary of China’s pol­icy to re­move lim­its on for­eign own­er­ship in pas­sen­ger car joint ven­tures,” said Premier Li in the let­ter. “It has cre­ated a new era and a win-win sce­nario for the in­te­grated devel­op­ment of the Chi­nese and Ger­man au­to­mo­bile in­dus­try.”

“Build­ing on this strong foun­da­tion, we are look­ing for­ward to an even more suc­cess­ful fu­ture to­gether,” said Har­ald Krueger, chair­man of BMW.

Krueger said the term of the joint ven­ture has been ex­tended from 2018 to 2040, and BMW will in­vest 3 bil­lion eu­ros to raise its an­nual ca­pac­ity to 650,000 ve­hi­cles from the early 2020s, which will cre­ate 5,000 more new jobs.

The plants will be made ready for pro­duc­ing more BMW mod­els, in­clud­ing elec­tric ones. BMW has also built a bat­tery plant in China.

Yale Zhang, head of Shang­hai-based con­sul­tancy Au­to­mo­tive Fore­sight, said BMW will in­tro­duce mod­els even faster when it be­comes the con­trol­ling share­holder of the joint ven­ture start­ing from 2022.

Zhang said that will pro­duce a domino ef­fect, prompt­ing BMW ri­vals to speed up lo­cal­iza­tion as well, be­cause the pre­mium car mar­ket is a place where “the fast fish eats the slow fish”.

BMW’s eq­uity change may set an ex­am­ple for other global car­mak­ers to fol­low suit as well, al­though it de­pends on how they have worked with their Chi­nese part­ners, he added.

“Many of them have the in­ten­tion to change, but how and when it will hap­pen de­pends on how strong or ca­pa­ble the lo­cal part­ner is,” Zhang said.

Build­ing on this strong foun­da­tion, we are look­ing for­ward to an even more suc­cess­ful fu­ture to­gether.” BMW chair­man

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