BMW raises stake in China JV, set to upgrade plant capacityBusiness | 11 Oct 2018 4:27 pm
Germany's BMW AG said today it agreed to increase its stake in its Chinese joint venture to 75 percent from 50 percent in a 3.6 billion euro deal set to close in 2022.
Beijing has said it plans to eliminate a limit on foreign ownership of automotive ventures by that year.
The German auto maker and its Chinese partner, Brilliance China Automotive Holdings, also agreed to extend the contract of their BMW Brilliance Automotive Ltd. joint venture to 2040 from its existing expiration date in 2028, BMW said, the Wall Street Journal reports.
BMW's deal to acquire the additional shares in the venture needs to receive customary approval from authorities and the consent of Brilliance China's shareholders, BMW said.
Under the deal, the German car maker intends to increase production capacity at the venture's existing plants in Shenyang. Investment of more than 3 billion euros in new and existing facilities in Shenyang is planned over the coming years, according to the company's statement.
The total annual production capacity of automobiles at the venture's plants will increase to 650,000 starting in the early 2020s, creating 5,000 new jobs, BMW said.
"We are consistently following our growth strategy for China. With continuous investment, as well as the development and production of electric vehicles, we underline China's importance as a dynamic growth market for us," said Harald Krueger, BMW's chairman of the board of management, in a news release.
In 2017, around 560,000 BMW brand vehicles were delivered to customers in China. Two-thirds of all BMW vehicles sold in China last year were produced by the joint venture at two automotive plants in Tiexi and Dadong, the company said.
The deal's closing will result in the joint venture being fully consolidated in BMW's financial statements, the company said.