BMW finally holds a 75% stake in BMW Brilliance and has pushed 26 new cars this year

On February 11, the BMW Group announced that from February 11, 2022, the new joint venture contract of BMW Brilliance Automotive Co., Ltd. (hereinafter referred to as "BMW Brilliance"), a joint venture of bmw group in China, came into effect, and the validity period of the joint venture between BMW Group and Chinese partners was extended to 2040. The BMW Group's stake in BMW Brilliance was changed to 75%, and its partner Brilliance China Automotive Holdings Limited indirectly held the remaining 25%.

BMW Brilliance is the first joint venture with a foreign ownership ratio of more than 50%. As early as October 2018, the BMW Group said in a statement that BMW would acquire part of bmw Brilliance for 3.6 billion euros, increasing its shareholding ratio to 75%. Subsequently, Brilliance Auto also issued an announcement that it would sell a 25% stake in BMW Brilliance to BMW. At that time, according to the new national industrial policy, BMW Holding Brilliance would take effect after 2022.

On 27 December 2021, the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) issued the Special Administrative Measures for Foreign Investment Access (Negative List) (2021 Edition), which, from 1 January 2022, in the field of automobile manufacturing, will abolish the restriction on foreign ownership in passenger car manufacturing and the restriction that the same foreign company can establish two or less joint ventures in China to produce similar vehicle products. Previously, the mainland has lifted the foreign ownership restriction on new energy vehicles in 2018 and the foreign ownership restriction on commercial vehicles in 2020. The abolition of the passenger car share ratio restriction means that the mainland automotive industry has completely opened up to the outside world.

"Today marks an important step for the BMW Group to invest in China, and we will continue to strengthen our long-term commitment to the Chinese market and continue our business development." BMW Group Chairman Chiptzer said.

BMW is increasing its investment in the Chinese market, BMW Brilliance will usher in another capacity increase this year, the existing plant in Shenyang's Dadong District is currently undergoing a full expansion, and a new plant in Tiexi District is also under construction. BMW's production capacity in China will be expanded, the variety of locally produced models will be further increased, and more pure electric models will be introduced for domestic production. According to the plan, in 2022, BMW Group will put into production the second BMW pure electric vehicle in Shenyang, pure electric 3 series, further enhancing China's status as one of the three major new energy vehicle production bases of BMW Group in the world. According to the plan, BMW will launch 26 new products in the Chinese market this year, of which BMW new energy products will be expanded to 7 models, in addition to the iX3 and iX that have been put on the market, BMW Group will also launch i4, BMW iX3, pure electric 3 series, a pure electric flagship model, and two plug-in hybrid models in China. By the end of 2023, the BMW Group will offer 13 pure electric products in the Chinese market.

BMW can become the first company to break through the 50% shareholding ratio, which is closely related to the strength of its partner Brilliance Group. From the perspective of business operation, Brilliance Group has a strong dependence on BMW. At present, Brilliance Group is in the process of bankruptcy reorganization, and the company has repeatedly said that BMW Brilliance will not be affected. After a 25% reduction in the share ratio, Brilliance China's profit from the joint venture will shrink significantly.

"After the liberalization of the share ratio restriction, BMW set a precedent, and there should be a follow-up of joint venture companies." However, the determination of the equity ratio of each party depends on their respective values and contributions. Some weaker self-owned brand stock ratios will decline, but it is not excluded that some joint venture companies may also have the possibility of lower foreign ownership ratios. Zeng Zhiling, general manager of LMC AutoMotive Market Consulting (Shanghai) Co., Ltd., once told reporters that the profit of luxury cars is higher, so it is most likely to change the share ratio, but it also depends on the strength of all parties, some foreign car companies have achieved a high degree of localization, the degree of dependence on partners is high, and some models produced in China are even exported to foreign markets.

In the view of Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, after the full liberalization of the stock ratio, there may be some changes in the domestic automobile market, but in the end, it depends on the contributions and capabilities of The Chinese and foreign parties in the joint venture company. On the one hand, in recent years, Chinese car companies have grown rapidly and have already possessed considerable confidence and strength, on the other hand, foreign companies want to increase their shares in joint ventures in China, whether from the perspective of funds or considering localization development, the difficulty and challenges are not small.