BMW takes control of its Chinese joint venture

German automaker takes its stake to 75 per cent, and locks the venture in until 2040.

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.

As part of the contract renewal, BMW will grow its stake in the joint venture from 50 to 75 per cent. When this change occurs is unclear, as the move still needs to be approved by Brilliance’s shareholders and the Chinese authorities.

The German automaker has also committed to spending €3 billion ($4.9 billion) upgrading its facilities in Shenyang, as well as making substantial improvements to its factories in Tiexi and Dadong.

These changes are expected to increase production capacity to 650,000 cars per annum. BMW made almost 400,000 cars in China last year, with a further 160,000 or so imported from other countries.

Models currently made in China include the 1 Series sedan, 2 Series Active Tourer, 3 Series short- and long-wheelbase sedans, 5 Series LWB, X1, and X3. The Dadong factory will also be sole production facility for the upcoming iX3 electric crossover.

BMW is the first manufacturer to take advantage of the relaxation of China’s restrictions on automaker ownership. Since 1994, the country has required all car making entities to be at least 50 per cent owned by a local partner.

In April this year, the Chinese government announced it would remove foreign ownership caps on makers of fully-electric and plug-in hybrid vehicles by the end of 2018.

By 2020 foreign companies will be able to wholly own a commercial vehicle manufacturer, with the restriction on general automakers lifted from 2022.

In July BMW started a new joint venture with Great Wall to produce electric Mini models in China.

Cover image: Chen Qiufa, head of the Communist Party’s Liaoning Committee, and Harald Kruger, BMW CEO.