BMW wants to be the leader in its Chinese joint venture.
BMW is in joint venture with Brilliance Automotive in China. BMW, the German automobile giant has decided to increase its stake to €3.6 billion, which will raise its stake from 75% to 50%. The company also expects to make a €3 billion investment in China to increase its production capacity. This announcement was made on Wednesday.
This decision was made by BMW after the Chinese government decided to ease its rules about foreign investment in the automobile industry in the country. At present no foreign car maker can have 100% stake in the Chinese local market; the stake can be a maximum of 50%. For this reason, BMW was in 50- 50 contract with Brilliance Automotive. This rule was implemented by the Chinese government since 1994. China is considered to be the biggest market for cars in the world and this rule was quite upsetting for the big automobile brands.
The new rule will be in place in 2022 and till that time BMW will be in contract with Brilliance. BMW plans to enhance the production level of cars in China by 650,000 from the beginning of 2022. This declaration was made by Harald Kruger, who is at present working as the chairman for BMW. He also feels that by this progress in production they will be able to product 100% electricity generated vehicles.
The Chinese government has asked the car makers to produce at least 20% cars as electric or rechargeable within 2025. Earlier in February, BMW has announced that it has coordinated with Great Wall Motor of China to manufacture electric Mini cars. These cars will be made exclusively to meet the demands of the Chinese market. At present the BMW and Brilliance holdings are known as the BMW Brilliance Automotive.