BMW shares fall as it announces plans to take control of China JV

BMW shares fall as it announces plans to take control of China JV

BMW shares are lower Thursday, as the German carmaker announced plans to take control of its longstanding China-based joint venture with Brilliance Motors. BMW will increase its stake in the deal from 50% to 75% in 2022, at a cost of €3.6 billion.

The German Group also intends to invest a further €3 billion in the JV, expanding its capabilities, with a new plant.

By 1315 BST, BMW shares were 0.97% lower at €74.62. The stock has been moving mainly lower in recent weeks.

BMW plans for China rule change

BMW’s agreement with Hong Kong listed Brilliance Motors comes ahead of a rule change in foreign ownership of car companies across China.

Right now, firms from overseas can hold no more than 50% of any China-based car manufacturing business. However, that rule will be relaxed in 2022 – the date when BMW’s stake increase will occur.

“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 Krüger, Chairman of the Board of Management of BMW.

Investment expansion plans

BMW detailed that its €3 billion investment plan in the JV’s car maker facilities will see an expansion of the existing factories across China, as well as the construction of a brand-new plant in Tiexi, doubling the existing capacity of the existing site there.

This will support plans to increase production in China to some 650,000 units per year, form the early 2020’s. This major investment is also set to create 5,000 new jobs across China.

“We are expanding our production system in Tiexi with a new plant,” said Oliver Zipse, member of the Board of Management of BMW AG, responsible for Production. “With our highly flexible production system, we can respond quickly to market demand and would be able to ramp up production of electric vehicles to 100 percent of our output.”

By Ilona Billington
Ilona is a freelance writer and editor with over 15 years experience reporting and writing about UK and European economics, real estate, financial markets and central banks.
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