In business, whenever someone you’re teaming up with is in trouble, the same goes for you. For BMW, it happened a number of times, the most famous such situation coming in the 1970s, when Lamborghini went bust, nearly taking down the BMW M1 with it. Today, things are a bit more nuanced but still complicated in case your long-time partner in the biggest automotive world is experiencing issues.
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As you might know, China has become the world’s largest auto market in the last few years. It is now the most important country for most car makers around the world, including BMW. However, China has different rules as to who can do business over there. Basically, in order to be able to do just about anything on their soil, you need a local partner and you can’t own more than 50 percent of the joint venture. For BMW, that partner is Brilliance Automotive.
According to recent reports coming in from Hong Kong, Brilliance Automotive is currently in trouble. Investors are apparently worried about the company’s ability to handle the debt it took on during the lockdown induced by the pandemic. The issues came to light after banks set up a creditor committee to coordinate claims on debts up to $200 million. These rumors are also not helping when it comes to the stock market, where the Brilliance China Automotive stock took a 35% hit on Thursday.
Another tricky issue is the fact that Brilliance Auto was supposed to be completely taken over by BMW by 2022, in a government-approved process. The issue now is that the company has to sell stocks to various investors to stay afloat, something BMW won’t like too much.
Therefore, future ownership remains unclear and this will definitely be an important hit for BMW, especially now, when China is the only market that seems to be recovering fast.
[Via: Automotive News]