BMW will invest $4.2 billion to the company’s main joint venture in China, Brilliance China Automotive Holdings Ltd., to take control of it, thanks to Beijing’s ownership relaxation rule. This move will increase BMW’s stake from 50 percent to 75 percent. The deal will finalize in 2022, as Beijing will revoke the laws covering foreign ownership for all auto ventures.
With this move, BMW will probably shift its production to China as trade war between Washington and China has increased the prices of BMW cars in its biggest market. The German automaker might start producing X4, X5 and X6 models here.
With the new investment, BMW will be developing a new plant spending more than 3 billion euros.
Though this deal will be very profitable for BMW, the shrinking role of Brilliance China Automotive Holdings Ltd will make them lose their footings in the local market. Their shares already took a plunge of around 50% due to this deal.
BMW finance chief Nicolas Peter stated, “Number one reason why we invest in China is that we are absolutely convinced the market has a further growth potential.”