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[YesAuto News] According to foreign media reports, the BMW Group plans to increase its shareholding in the BMW Brilliance joint venture to at least 75%. BMW Brilliance is currently 50% owned by Brilliance Group and BMW Group. The term of the joint venture between the two parties will expire in 2028. If the above news is true, the BMW Group will be the first foreign auto company to seek a higher share ratio after the auto joint venture share ratio policy is liberalized.

At present, both BMW China and BMW Brilliance said they did not understand the situation. Qi Yumin, chairman of Brilliance Automobile, also said, “Bullshit!” Prior to this, Nicolas Peter, the director of the BMW Group in charge of China affairs, also said that he had not considered changing the proportion of shares of the BMW Group in BMW Brilliance.

Can the BMW Group really hold a higher shareholding ratio in the BMW Brilliance joint venture? According to China's current “Automotive Industry Development Policy”, foreign auto companies entering China need to establish joint ventures, and the Chinese shareholding ratio must not be less than 50%. The same foreign company has at most two joint venture partners for similar products in China.

The restrictions on the shareholding ratio of joint ventures began to loosen this year. On April 17, the National Development and Reform Commission publicly stated that it would gradually loosen restrictions on the shareholding ratio of joint ventures in the next five years. Among them, in 2018, restrictions on foreign ownership of special vehicles and new energy vehicles will be abolished; in 2020, restrictions on foreign ownership of commercial vehicles will be abolished; in 2022, restrictions on foreign ownership of passenger vehicles will be abolished, and restrictions on joint ventures not exceeding two will be abolished.

Therefore, from a policy perspective, it is not impossible for the BMW Group to seek a higher share ratio, but the share ratio situation will not change before 2022. From the perspective of corporate operations, Brilliance relies heavily on BMW. According to the 2017 financial report of Brilliance Group, its net profit in 2017 was 4.38 billion yuan, of which BMW Brilliance brought a profit of 5.24 billion yuan. It can be seen that in addition to the profitability of BMW Brilliance, Brilliance Jinbei, China Auto and other brands under Brilliance are all in a loss state.

A senior expert in the automotive industry once said that after the auto joint venture share ratio is liberalized, some foreign companies will definitely seek a higher share ratio, “Who wants to walk with a brother who has no strength!”

It is also worth noting that the BMW Group has just joined hands with another partner, Great Wall Motors, in the Chinese market. On July 10, Great Wall Motors announced that it has reached a cooperation with BMW Group to establish a new joint venture company, Light Beam Motor Co., Ltd., each holding 50% of the shares. The cooperation content includes both pure electric vehicles and fuel vehicles, and will produce new brands and MINI brand products. Compared with Brilliance Group, Great Wall Motor seems to be a more competitive partner. The latter has ranked first in sales in the SUV field for many years, with a net profit of more than 5 billion yuan in 2017. In the future, it remains to be seen whether Great Wall Motors will replace Brilliance Group.

China has surpassed virtue to become the largest automotive market of the BMW Group. In 2017, the BMW Group sold approximately 560,000 vehicles in the Chinese market, two-thirds of which came from BMW Brilliance. Before the maturity of the cooperation project with Great Wall Motors, Brilliance will undoubtedly remain the most important partner of the BMW Group in China.

On July 9th, local time in Germany, at the same time that BMW Group and Great Wall Motors reached a cooperation, they also signed a long-term framework agreement with Brilliance Group. The two parties plan to increase the current production capacity of BMW Brilliance to 520,000 vehicles in 2019. At the same time, the BMW Group also plans to introduce one of its key pure electric SUV models, the BMW iX3, to BMW Brilliance for domestic production and export to other markets around the world.