BMW owns majority stake in Chinese JV

BMW has become the first international carmaker to take majority control of its Chinese joint venture, after the German company raised its stake in BMW Brilliance to 75 percent on Friday.

The German carmaker inked an deal with Brilliance Auto to scale up its stake in their joint venture from 50 percent to 75 percent, when China announced in 2018 it would relax ownership rules in the automotive industry.

The Chinese authorities removed foreign ownership caps for companies making fully electric and plug-in hybrid vehicles in 2018. The same rules took effect for commercial vehicle makers in 2020 and for the passenger car market starting from 2022.

Analysts said a majority stake in joint ventures, which means a larger say and more profit, will stimulate international carmakers' ambition and commitment in China, the world's largest vehicle market.

Besides the equity change, BMW and Brilliance's contract to extend their joint venture took effect on Friday as well. Established in 2003, the partnership now runs to 2040.

"Today marks an important step, as we continue to expand our long and successful commitment to China," said BMW Chairman Oliver Zipse in a statement on Friday.

"We firmly believe that our continued success in the world's largest automotive market can only go hand in hand with the growth and further development of our BBA joint venture," said Zipse.

BMW saw a 9 percent growth in its deliveries in China to 846,237 vehicles in 2021, as the best-selling premium carmaker in the country.

BMW Brilliance, based in Shenyang, Liaoning province, produced 700,000 vehicles in the year.

Chief Financial Officer Nicolas Peter told reporters that BMW's sales are expected to grow further in 2022 as the demand continues to grow in China.

BMW said it is expanding its production capacity in China, with one plant is currently being expanded and a new one under construction.

Among other vehicle models, BMW will start producing the X5 SUV, previously imported from the United States, in the second quarter of the year at the BMW Brilliance joint venture, according to Reuters.

"Our extended joint venture contract lays the foundation for further mutual growth and progressive development in the future. It therefore paves the way for balanced development in the three main regions of the world, as we have done in the past," said Peter.

Some other international carmakers are mulling raising the stakes in their joint ventures as well.

Late last month, Stellantis said it would like to increase its equity from 50 to 75 percent in its joint venture GAC-Stellantis, adding this will set a new basis for its business in China.