Joint venture increases stake to 75% BMW first eats shares to open "crab"

After the release of the passenger car stock ratio in 2022, who will be the first "crab eater" has attracted much attention. On February 12, the Beijing Business Daily reporter learned from the BMW Group that the bmw group's shares in BMW Brilliance were changed to 75%, and the first traditional joint venture car company controlled by foreign capital was quietly born.

Industry insiders said that after the equity increase, BMW is bound to further increase investment in China, promote the development of joint ventures to introduce more models in China, and accelerate the integration with its global strategy to promote electrification transformation. With the advent of the opening of the stock ratio, BMW took the lead in firing the first shot, which also indicates that the upgrading of Sino-foreign cooperation has entered a new stage.

The first foreign-controlled traditional joint venture car company landed

On 27 December last year, 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. With the removal of the restrictions on joint ventures, BMW Brilliance became the first foreign-controlled joint venture car company.

The Beijing Business Daily reporter learned that the new joint venture contract of BMW Brilliance, a joint venture of BMW Group in China, officially came into effect, and the validity period of the joint venture cooperation between BMW Group and its Chinese partners was extended to 2040. Gao Le, President and CEO of BMW Group Greater China, said: "This new joint venture contract and the approval of BMW's investment project in Liaoning are the latest examples of the opening up of the automotive industry. ”

According to the new joint venture contract, the BMW Group's shares in BMW Brilliance were changed to 75%, and Brilliance China indirectly held the remaining 25% of the shares. In this regard, brilliance China relevant people said that BMW Brilliance has received a new business license issued by the Shenyang Dadong District Market Supervision and Administration Bureau. As all the preconditions contained in the share transfer agreement have been met, it is expected that the closing of the shares will be implemented on February 18 this year. The equity transfer price adjusted under the agreement is 27.941 billion yuan, which will be paid in cash by BMW at the time of delivery.

As early as 2018, the BMW Group moved the idea of "harvesting" more equity. In April 2018, the shareholding limit of China Automobile Joint Venture was officially determined to abolish the phased transition. Subsequently, on October 11 of the same year, on the occasion of the 15th anniversary of the establishment of BMW Brilliance, the BMW Group announced that the shareholders would extend the joint venture agreement of BMW Brilliance until 2040 (2018-2040). At the same time, by 2022, bmw group will acquire 25% of BMW Brilliance for 3.6 billion euros, when BMW Group and Brilliance hold 75% and 25% of BMW Brilliance respectively.

Chiptse, Chairman of the BMW Group, said: "This is 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. The success of the BMW Group in China is inextricably linked to the growth of the joint venture BMW Brilliance. ”

Further expansion

The 25% increase in holdings will not only further improve the profits of the Chinese market for the BMW Group, but also help its global profits.

According to the data, BMW delivered more than 850,000 BMW and MINI cars in the Chinese market last year, an increase of 8.9% year-on-year, and won the first place in the sales list of domestic luxury brands. At the same time, the joint venture company also brought considerable profits to shareholders, and the financial report shows that from 2015 to 2019, BMW Brilliance contributed 26.92 billion yuan of profits to Brilliance China, and the scale of contribution showed an increasing trend. Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, said that the profit of the joint venture company is very high, which is very attractive to both the Chinese and foreign parties, and the increase in the shareholding ratio will further increase the profit of the BMW Group. It has been reported that the increase in BMW's shareholding will have a positive impact of 7 billion to 8 billion euros on the current financial performance of its automotive division and increase free cash flow by about 5 billion euros.

However, profit improvement is only one aspect, and BMW Group's increase in equity will increase its voice in the joint venture company and better promote the development in China and its international strategy. According to the BMW Group's plan, it is planned to complete the delivery of 2 million pure electric vehicles worldwide by the end of 2025, and pure electric vehicles will account for at least 50% of the total delivery volume of the BMW Group by 2030. Over the next decade or so, the BMW Group plans to deliver around 10 million pure electric vehicles worldwide.

In order to achieve the goal, the Chinese market has become an important starting point for the BMW Group. According to the data, the production and sales of new energy vehicles in China in 2021 reached 3.545 million units and 3.521 million units, respectively, an increase of 1.6 times year-on-year. Cui Dongshu, secretary general of the passenger car market information joint meeting, said that new energy vehicles are becoming the biggest highlight of the automotive industry, the development of new energy vehicles has shifted from policy-driven to market-driven new development stages, and the Chinese market has also become the strategic focus of multinational car companies' transformation and electrification.

"BMW Brilliance will usher in another increase in production capacity this year." BMW Group sources said that the existing plant in Shenyang's Dadong District is currently undergoing a comprehensive expansion, and a new factory in Tiexi District is also under construction. The BMW Group'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 BMW's previous plan, in 2022, the BMW brand will present five pure electric vehicle models for Chinese users, including the innovative BMW iX, the innovative BMW i4 and the pure electric BMW 3 series produced in Shenyang. In addition, the bmw i7, the first all-electric luxury flagship sedan, will be unveiled within next year. By the end of 2023, the BMW Group will offer around 13 pure electric products in the Chinese market. By 2025, a quarter of the BMW Group's sales in the Chinese market will be pure electric vehicles. "In the BMW Group's transformation to electrification, digitalization and sustainable development, China, as a leader in these aspects, is our best choice and best partner," said Gaole. ”

In Yan Jinghui's view, after the increase in the shareholding ratio, BMW will accelerate further investment in China, which is not only conducive to local economic taxation. At the same time, after having more say, bmw group can better introduce more models, accelerate the development of joint ventures, and help its global transformation.

The "game" continues

At the same time that the dust of BMW's equity change has settled, the major multinational car companies around the release of the vehicle joint venture share ratio have also "waited for the opportunity".

A few days ago, Stellantis Group announced on its official website that it plans to increase its stake in the joint venture GAC FCA from the current 50% to 75%. It also said that "GAC Group and Stellantis Group have agreed to the relevant procedures for the transaction, but still need to be approved by the regulatory authorities." Interestingly, shortly after the announcement, GAC Group issued an announcement that GAC Group learned from the official website of Stellantis about its release of the equity adjustment of GAC FCA, and the shareholders of the two sides of the joint venture had in-depth communication and consultation on their joint venture and the revitalization plan of GAC FCA, and the two sides have not yet signed a formal agreement on the equity adjustment of GAC FCA. Judging from the announcements of the two sides, there is no agreement on the adjustment of the share ratio, but there has also been communication, and the first announcement of the Stellantis Group also reveals its ambition to increase its equity holdings.

Not only GAC FCA, since The transfer of 25% of the equity of Dongfeng Yueda Kia at a price of 297 million yuan in December last year, the rumor that Kia will hold the joint venture in China has not been interrupted, although after the completion of the equity transfer, the equity structure of the joint venture company has become 50%, 25% and 25% each held by Kia, Yueda Automobile Group and Yueda Investment, and Kia still has not been able to hold, but the industry believes that this is only a short transition period. On February 7 this year, Kia signed an expansion investment agreement with Yancheng People's Government and Yueda Group. Under the agreement, Kia and Yueda Group intend to form a new joint venture, with a total investment of US$900 million. Although whether the share ratio will change after the capital increase has not yet been disclosed, from the perspective of the future development of the joint venture, the outside world believes that Kia may become the dominant holding company.

Compared with BMW Brilliance, which can bring high profits, the joint venture between Kia and Stellantis Group in China is completely different, and the decline in sales has caused both shareholders to continuously transfuse blood to the joint venture. Despite this, in the face of the Chinese auto market with huge market potential, foreign parties are still unwilling to give up. The two companies have preliminary plans for future development.

At present, the Stellantis Group is in a critical phase of the transition to electrification. Last year, it announced it would launch 11 all-electric models and 10 plug-in hybrid models over the next 24 months. Stellantis Group officials said that the details of China's strategy will be announced in the global strategic plan on March 1 this year. In addition, a relevant person from Kia also said that after the establishment of the new joint venture company, it will rapidly increase vehicle sales and capacity utilization rate by expanding investment, introducing new models, developing new energy vehicles, and setting up export bases. According to the plan, the new company will release a new name and a new brand strategy in April this year. Industry insiders believe that the purpose of the two companies' foreign increase in holdings is to revitalize the Chinese market. After increasing the shareholding, the controlling shareholder can better sort out the business sector in China and pave the way for later development.

Beijing Business Daily reporter Liu Xiaomeng