China removes auto ownership cap

BEIJING: China will allow foreign automakers from Volkswagen AG (VW) to Ford Motor Co to own more than 50% of local ventures, removing a two-decade restriction and giving a boost to global companies seeking to capture a greater share of the world’s largest car market.

In a move helping electric-car makers such as Tesla Inc, the ownership limits for new-energy vehicles would be removed this year, National Development and Reform Commission said in a statement on its website.

China will do away with the limit for commercial vehicles in 2020 and that for passenger vehicles in 2022.

Potential beneficiaries include companies from Daimler AG and BMW AG to General Motors Co and Toyota Motor Corp, all set to find it easier to manufacture and do business in China.

The country’s local auto makers, meanwhile, will be under increased pressure to speed up the building of their own brands.

Shares in German carmakers all gained on the news, reversing earlier losses. China accounts for about half of VW’s namesake brand sales, while the world’s biggest car market is also the most significant buyer of luxury Mercedes, VW’s Audi unit and BMW vehicles. €

VW rose as much as 0.9% to 173.48. Both BMW and Mercedes-maker Daimler rose about 0.5%.