BMW Sets its Plan to Be Primary Foreign Automaker to Control China JV

Company - Mohit Shah - Jul 13,2018

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bmw sets its plan to be first foreign automaker to control china jv

BMW AG stands to become the first foreign car manufacturer to own a majority in a Chinese joint venture. The Munich-based luxury-car maker plans to unveil the new ownership structure of its venture with Brilliance China Automotive Holdings very soon.

It has been well-identified that China is the biggest market for many brands, including Volkswagen, Audi, BMW and Daimler’s Mercedes-Benz. BMW’s this amazing move highlights some of the paradoxes facing global companies as they look at the Chinese market. China and Germany agreed this week to facilitate the move. The second-biggest luxury-car maker currently holds a 50 percent stake in the partnership.

BMW is the biggest exporter of vehicles from the U.S. to China, putting it among major companies most exposed to a trade war. Earlier this week, the company sealed a separate venture to produce electric vehicles and other cars with partner Great Wall Motor Co. It agreed with Brilliance to lift output in the nation to more than 500,000 cars. However, BMW declined to comment on the state of its discussions with Brilliance.

Chief Executive Officer of BMW, Harald Krueger was in Berlin at the start of the week during a summit meeting between German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang. During the summit, many discussions were taken place and one of the vital discussion was for opportunities to open up China more to the foreign investment. On Tuesday, the Chinese Foreign Ministry quoted that “China and Germany, both for the first time reached the agreement on increasing the share of German automobile companies in the jointly invested projects in China”.

It would not be wrong to say that owning a larger slice of BMW Brilliance Automotive would come at an opportune time for BMW. The company is estimated to import into China about 70,000 sport utility vehicles from its factory in the U.S., where it produces SUVs for the global market.

Besides BMW, Volkswagen AG, which is the prime foreign automaker in China, also held discussions with China’s premier in Berlin, resulting in an initial agreement with partner FAW Group to spread electric vehicles.