BMW Brilliance launched the "first shot" of the opening of the joint venture share ratio, and BMW's equity increased to 75%

In recent years, with the mainland's in-depth promotion of high-level opening up, the restriction of foreign ownership in the automobile industry has become a topic of constant discussion.

Recently, the BMW Group announced that from February 11, 2022, the new joint venture contract of BMW Brilliance Automotive Co., Ltd., a joint venture of the BMW Group in China, officially came into effect. As a result, the BMW Group's stake in BMW Brilliance was officially changed to 75%, Brilliance China Automotive Holdings Co., Ltd. (hereinafter referred to as "Brilliance Auto") indirectly held the remaining 25% of the shares, and the cooperation period between the two parties was extended to 2040. Chiptse, Chairman of the BMW Group, said: "The change in the shareholding ratio marks an important step in the BMW Group's investment in China, and we will continue to strengthen our long-term commitment to the Chinese market and continue our business development. ”

BMW accelerates product planning

In fact, as early as 2018, BMW Group and Brilliance Automotive jointly announced that the shareholders would extend the joint venture agreement of BMW Brilliance until 2040 (from 2018 to 2040). At the same time, the BMW Group announced that it intends to acquire 25% of the shares of BMW Brilliance for 3.6 billion euros, which also makes the BMW Group the first foreign car company to announce an increase in the shareholding ratio. However, according to the national industrial policy at that time, BMW Holding Brilliance will take effect after 2022. To this end, BMW has adopted a step-by-step strategy. In 2021, BMW announced the acquisition of the Zhonghua factory for 1.633 billion yuan, when some insiders analyzed that BMW Group may participate in the bankruptcy restructuring of Brilliance Automobile and recently acquire equity. However, since then, there have been news that bmw group acquisition of the Zhonghua factory has been blocked. This also made the industry speculate more about the change of equity, but with the efforts of many parties, the new joint venture contract was finally successfully landed.

It is worth noting that BMW can become the first beneficiary of the opening of the passenger car joint venture share ratio, which is closely related to the operation of Brilliance Auto. Since the joint venture, Brilliance Auto has been extremely dependent on BMW. According to the data, BMW Brilliance is the largest taxpayer in Shenyang, with a tax payment of 38 billion yuan in 2020 alone. After BMW increases its shareholding ratio, the profit of the BMW Group will also increase significantly. In this regard, BMW Brilliance said that after BMW increases its shareholding ratio, BMW Brilliance will be fully incorporated into the group financial statements of BMW Group, which is expected to bring 7 billion to 8 billion euros (about 50.7 billion to 57.8 billion yuan) to the financial data of BMW's automotive division. In terms of sales, according to the 2021 sales data released by BMW Group, BMW's annual sales in the mainland reached 846237 vehicles, an increase of 8.9% year-on-year, and won the first place in the sales list of domestic luxury brands.

While sales continue to grow, BMW Brilliance will also increase its production capacity again. It is understood that BMW Brilliance's factory in Shenyang's Dadong District is currently undergoing a comprehensive expansion, and a new factory in Tiexi District is also under construction. With the continuous improvement of production capacity, the BMW Group will also introduce more pure electric vehicle models for domestic production.

According to BMW's previous plan, in 2022, the BMW brand will have 5 pure electric vehicles to be localized, 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 period sedan, will be unveiled within the year of 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.

Gao Le, President and CEO of the BMW Group Greater China, said: "In the transformation of the BMW Group towards electrification, digitalization and sustainable development, China, as a leader in these aspects, is our best choice and best partner. The BMW Group will continue to take China as its home, its counterparts with China, and its joint venture partners will continue to invest in the future to make long-term contributions to China's economic growth and social development. ”

Many car companies are eager to try

Some people believe that after the opening of the joint venture share ratio, the BMW Group has set a precedent, and there should be other car companies following suit. This also means that the mainland's auto market has entered a stage of self-regulation. Cui Dongshu, secretary general of the Association, said: "From the withdrawal of Changan Suzuki from the Chinese market, to Dongfeng Renault, FAW Mazda, etc., and now Dongfeng Yueda Kia, many cases reflect such a phenomenon: the period of joint venture car companies enjoying the dividends of the Chinese auto market has passed. With the intensification of brand differentiation, many companies are hovering on the verge of reshuffling and elimination. They are more likely to pursue equity changes in order to survive. ”

In fact, as early as 2018, there was news that Daimler intended to increase its stake in Beijing Benz, raising its share ratio from 49% to 65%. In 2019, it is also reported that Daimler is expected to increase its stake in Beijing Benz to 75%.

Coincidentally, Stellantis Group also recently announced on its official website that it plans to increase its stake in the joint venture GAC FCA from 50% to 75%. It also said that GAC Group has agreed to the transaction, but it needs regulatory approval. However, GAC Group immediately issued a statement saying that the equity adjustment was not approved by GAC, and that the two sides had not yet signed a formal agreement on the equity adjustment of GAC FCA.

Although GAC Group denied GAC FCA's equity adjustment, the purpose of Stellantis Group is also public, perhaps it is only that there is no agreement on the equity transfer, and the change is only a matter of time. At the same time, there are media reports that Stellantis Group will adjust the internal structure of DPCA. According to the disclosed information, DPCA will still be retained as a production base, and the share ratio will remain unchanged, but in the future, Dongfeng Peugeot will be dominated by the French side, and Dongfeng Citroen will be led by the Chinese side.

In addition, Hyundai Motor has also been revealed to plan to increase the equity of Beijing Hyundai, and Kia has re-established a joint venture relationship with Yueda Group, but the share ratio has not yet been announced. Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, said: "After the full liberalization of the stock ratio, there may be some changes in the domestic auto market, but in the end it depends on the contributions and capabilities of 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. ”