Brilliance China may sell its stake in BMW JV

Brilliance China Automotive's (1114) biggest shareholder is considering options to raise funds including selling the company's 25 percent stake in its joint venture with BMW, according to people familiar with the matter.

Shares of Brilliance China Automotive climbed 4.5 percent as other automakers are interested in taking over the stake.

Several Chinese carmakers, including China FAW, have been involved in preliminary talks about the stake in BMW Brilliance Automotive, the people said, asking not to be identified because the deliberations are private.

Talks are ongoing, no final decision has been made and there may not be a transaction, the people said.

BMW Brilliance is Hong Kong-listed Brilliance China's most valuable asset, accounting for all its net income.

BMW spent EUR3.6 billion (HK$30.8 billion) in 2022 to lift its stake in the joint venture to 75 percent from 50 percent.

Brilliance China's parent, Brilliance Auto Group Holdings is undergoing a restructuring after defaulting on debt payments in 2020. Regulators also fined the company millions of yuan for a range of violations, including fabrication of earnings reports. A plan approved last year will see the government of Shenyang, the northeast Chinese city where the group is based, take over and repay Brilliance Auto's creditors 16.4 billion yuan (HK$17.96 billion) in installments.

Officials from the Shenyang government, which will have a 29.99 percent stake in Brilliance China when the restructuring is completed, said they weren't aware of the potential sale of the joint venture holding. Brilliance China and FAW representatives didn't respond to requests for comment, while BMW declined to comment.

Meanwhile, Chinese electric vehicle maker Li Auto (2015) reportedly cut prices by as much as 38,000 yuan for some models, joining a new round of price war for the sales before the Chinese New Year holiday.

Li Auto responded that the cut comes amid rising competition with three foreign luxury brands, including Benz, BMW, and Audi. It also expects the time-limited offers can help the company in the model transition.

Shares of Li Auto dived 4.3 percent, together with XPeng (9868) losing 9.2 percent. Nio (9866) decreased 2.8 percent.