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February 18, 2022

BMW lifts stake in Chinese JV

BMW makes the most of a relaxation in foreign ownership rules from Beijing.

By David Leggett

BMW AG confirmed this week it has completed the acquisition of a majority stake in its main Chinese joint venture, strengthening its grip on its operations in its largest global vehicle market.

The move follows a relaxation of China’s foreign ownership restrictions on local vehicle manufacturing companies at the beginning of 2022, although each individual case remains subject to government and local shareholder approval. Other global vehicle manufacturers, including Stellantis, have recently indicated they are also making plans to acquire majority stakes in their Chinese joint ventures.

The German automaker reportedly plans to invest EUR3.7bn to raise its stake in BMW Brilliance Automotive Ltd to 75% from 50%, a move it had already signalled back in 2018. Its local partner, Brilliance China Automotive Holdings Ltd., will retain a 25% stake in the joint venture – which produced some 700,000 vehicles last year.

BMW said the transaction will create a one-off financial gain of between EUR7bn and EUR8bn due to an asset revaluation and also significantly lift its cashflow and earnings.

Until recently, Tesla was the only foreign automaker to own a majority stake in a Chinese vehicle manufacturing company, mainly because its wholly-owned Shanghai electric vehicle (EV) plant only became operational in 2019 and also because it was located in a special economic zone.

Like Tesla, BMW is expected to turn its Chinese operations into a major export hub. The company sold a total of 846,000 BMW and Mini-branded vehicles in China last year, up 21% from the previous year and equivalent to 40% of its global sales.

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