BMW plans to take control of China joint venture

BMW headquarters in Germany

BMW headquarters in Germany

German luxury carmaker BMW announced Thursday a plan to take control of its China joint-venture, the first foreign automaker to take advantage of Beijing's new ownership rules for the sector. The deal will close in 2022 when rules capping foreign ownership are lifted.

He said control of the joint venture could spur BMW to bring production of models like the BMW X4, X5 and X6 sport utility vehicles, which are now built in the United States, to China. "Our success story goes hand in hand with the success of the joint venture BBA".

The rule changes already helped Tesla Inc to gain Beijing's approval for a wholly-owned China manufacturing and sales company in Shanghai.

The deal also marks a milestone for foreign carmakers which have been capped at owning 50 per cent of any China venture and have had to share profits with their local partner.

The country is BMW's single largest sales market, with 560,000 vehicles sold there a year ago.

Several investment banks cut their ratings or target prices for Brilliance Auto, including Bank of America Merrill Lynch and Nomura, while UBS said the sale of the stake could cost Brilliance Auto's least half its profits. Cars made under than partnership are aimed at the Chinese market.

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BMW is one of the biggest exporters of vehicles from the United States to China, putting it firmly in the crosshairs of the trade war.

From 2020, the fully-electric BMW iX3 will also roll off the production line at Plant Dadong, its sole production location, and be exported from China to markets worldwide.

In August, China's new vehicle sales continued to fall, following a drop in July.

BMW and Brilliance have just signed an extension to their joint venture operations in China, with the new contract seeing the two automakers working together until 2040.

BMW finance chief Nicolas Peter, however, said the firm remained bullish about its top market.

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