The author | Nie Yiyao
The source | Auto Grand view
Today is a sweet day, Western Calendar Valentine's Day, I believe many friends feel this sweet holiday atmosphere. However, in the automotive circle, recently I feel more about the topic and dispute between the Chinese and foreign shareholders of the joint venture car companies around the share ratio.
It is said that lovers eventually become dependents, but between couples who have become dependents, in the long-term common life, there are very few who do not play games and run into each other for their respective positions and voice rights in the family. In particular, the marriage of large families involves huge interests behind it, and both sides hope that the result of the marriage will give them more empowerment.
Sino-foreign car companies joint venture, this is the case.
Since the establishment of the first passenger car joint venture in mainland China in 1984, the competition for the share ratio of Chinese and foreign car companies in the joint venture company formed by the "marriage" has not stopped.
Especially in the early spring of 2022, with the national regulations from January 1, 2022, the restriction on the proportion of foreign ownership in passenger car manufacturing not exceeding 50%, and the restriction that the same foreign company can only establish two or less joint ventures producing similar vehicle products in China. There is a lot more news about the change in the share ratio of joint venture car companies.
BMW led the increase in shares, and followed the trend
On February 11, 2022, the BMW Group announced that its new joint venture contract in China, BMW Brilliance AG, will come into effect.
According to the new joint venture contract, as of February 11, 2022, the BMW Group will hold 75% of the shares in BMW Brilliance, and the remaining 25% of the shares will be held indirectly by its partner Brilliance China Automotive Holding Co., Ltd. In addition, the validity period of the joint venture cooperation between the two parties has been extended to 2040.
Chiptzer, Chairman of the BMW Group, said: "Today (February 11, 2022) marks an important step in the BMW Group's investment in China. ”
That's true. With the official entry into force of BMW Brilliance's new joint venture contract, the BMW Group has strived for many years to increase the shareholding ratio requirements of BMW Brilliance, and finally realized in the new joint venture contract. As a result, BMW Brilliance has become the first traditional joint venture car company controlled by foreign capital after the liberalization of the share ratio.
When BMW Brilliance was established in 2003, according to the national policy at that time, the shareholding ratio of both BMW Group and Brilliance Group was 50%. Since then, as BMW's sales in the Chinese luxury car market have soared, the once solid "marriage" relationship has begun to change subtly.
BMW has a strong brand appeal and market fans in China, as a party to the brand and technology output, the BMW Group has naturally generated more demands for the distribution of rights and benefits in the joint venture company.
To this end, the BMW Group has made solid efforts. In 2018, the BMW Group invested 3.6 billion euros to acquire a 25% stake from Brilliance Group, which holds 75% of BMW Brilliance. In 2021, BMW announced the acquisition of the Zhonghua factory for 1.633 billion yuan, which in turn promoted the restructuring of Brilliance Group and the equity adjustment of BMW Brilliance. But since then, there have been news that BMW's acquisition of the Zhonghua factory has been blocked.
The entry into force of the new joint venture contract of BMW Brilliance announced that the bmw group's share ratio dispute has finally come to a successful end. For BMW, a new chapter has begun.
The equity ratio of joint venture car companies has been liberalized, and it is not only BMW that has stirred up. There are many foreign car companies that intend to increase the proportion of equity after the liberalization of the equity ratio in order to gain more development in the domestic auto market.
On January 27, 2022, Stellantis Group announced on its official website that it plans to increase its shareholding in the domestic joint venture GAC FCA from the current 50% to 75%, and GAC Group and Stellantis Group have agreed to the relevant procedures for the transaction, but still need to be approved by regulatory authorities.
However, on the same night, GAC Group issued an announcement "debunking rumors", saying that the official website of Stellantis published a statement on the adjustment of GAC FCA's equity, which was not recognized by it, and the two sides had not yet signed a formal agreement on the adjustment of GAC FCA's equity.
From the statements of Stellantis and GAC Group, it is not difficult to see that Stellantis has a strong desire to increase its shareholding ratio in GAC FCA, while GAC Group does not seem to agree much, and the two sides have not reached an agreement.
At the same time, it is also rumored that Stellantis Group is seeking a clearer structural adjustment for another joint venture in China, Dongfeng Group, DPCA, which is a joint venture with Dongfeng Group, that is, the "two rooms and one hall" model of DPCA that has recently been exposed by the media.
The "two rooms" refers to the two brands of Dongfeng Peugeot and Dongfeng Citroen), which will be led by foreign parties and Chinese parties respectively. "One hall" refers to the sharing of existing public areas such as commodity planning, technology, quality, and industrial production.
According to relevant information, the adjustment of the brands of DPCA by Stellantis Group and Dongfeng Group is a continuation of the deepening reform of DPCA, which is in line with the unanimous needs of the shareholders of both sides in the Chinese market, and a new measure taken by both parties for the good development of the dual brands based on the long-term optimism of the Chinese market.
Perhaps, with the liberalization of the share ratio, the foreign investors of more joint venture car companies will increase their equity through various means. For example, JAC Volkswagen has changed its name to Volkswagen (Anhui), and Volkswagen Group holds 75% of the shares. Audi, Volkswagen and FAW are joint ventures of Audi FAW New Energy, in which Audi and Volkswagen hold 60% of the shares.
Will the liberalization of the stock ratio have an impact on autonomous car companies?
50% of the share ratio red line, officially issued in 1994 "Automobile Industry Policy". It stipulates that the shareholding ratio of foreign capital in the joint venture projects of vehicle enterprises in China shall not exceed 50%, and the joint ventures of foreign capital producing similar vehicle products in China shall not exceed two. In the 2004 and 2009 versions of the automotive industry policy, these two restrictive policies were continued.
The purpose of these two regulations was to protect the mainland's independent automobile industry from being impacted by foreign brands.
In the early stage of reform and opening up, the mainland automobile industry (especially cars) was weak in technology, and it was necessary to use the advanced technology and management of foreign car companies to help their own development, and the huge opportunity for the development of the domestic market attracted foreign car companies.
As a result, with the opening ceremony of Beijing Jeep Automobile Co., Ltd., a joint venture between Beijing Automobile Manufacturing Plant and American Automobile Corporation (AMC), held an opening ceremony in January 1984, and joint venture car companies mushroomed one after another.
In fact, before the official promulgation of the "Automobile Industry Policy", the shareholding ratio of Sino-foreign joint venture car companies was also strictly in accordance with the red line that foreign-funded enterprises should not exceed 50%. For example, when Beijing Jeep was founded in 1984, BAIC Group held 68.65% of the shares, and the United States held 31.35%. When Shanghai Volkswagen was founded in 1985, both Sides held 50% of the shares.
However, with the rapid development of China's auto market, there is more and more discussion about the liberalization of the stock ratio. In April 2016, Miao Wei, then minister of the Ministry of Industry and Information Technology, publicly stated that the liberalization of the joint venture equity ratio has entered the countdown stage, ranging from 8 years to 3-5 years, which is the first time that China has revealed the timetable for the liberalization of the joint venture equity ratio.
In response to this statement, the opposition in the industry was quite strong at that time. However, from today's point of view, the liberalization of the stock ratio is already unacceptable to China's independent car companies.
After decades of development and precipitation, especially the recent decade of catch-up breakthroughs, independent car companies have made obvious qualitative leaps in technology, brand, market and other aspects.
In the 2021 domestic market sales ranking, Geely Automobile surpassed SAIC Volkswagen to leap to third. Changan Automobile surpassed Dongfeng Nissan in fifth place. Among the new energy vehicles, independent brands such as BYD, Weilai, Ideal, and Xiaopeng have comprehensively surpassed the joint venture brands.
Obviously, in today's domestic auto market, the aura of joint venture brands is gradually fading, and the strength of independent brands is gradually rising. The transformation of the "new four modernizations" of automobiles has opened up new rules and new battlefields, and this is the stage that independent car companies are better at.
Are autonomous car companies still afraid of the impact of the liberalization of the stock ratio? You don't have to. On the contrary, it is time to use good stocks to give more encouragement and incentives than to release them to independent car companies.