Just recently, we learned that BMW’s Chinese partner Brilliance Auto might enter some pretty hot water since its parent company, Huachen Automotive, is currently in trouble with its investors. Well, today BMW acknowledged the problem but claimed that their plans regarding the take-over of their long-time partner are not affected by this development. The BMW Group is still on track to expand its share in the joint venture.
“The BMW Group and the operating business of the joint venture BMW Brilliance Automotive Ltd. (BBA) are not directly affected by the payment difficulties of the Chinese Brilliance Group. For the BMW Group, there is no indication that the validity of these contracts would be limited by the current situation,” a BMW representative told Reuters on Tuesday. The contracts this statement refers to were signed in 2018 and include a clause that has BMW paying $4.2 billion in 2022 for a further 25 percent stake in the venture with Brilliance, offering it total control.
According to analysts, BMW is right to fend off any fears, as 50 percent of BBA is not directly held by Brilliance, but through two layers of entities that are 100 percent owned by Brilliance and its subsidiary. This makes the future plans for the joint venture safe, even in case the parent company goes under. Furthermore, sources close to the case claim that all parties involved are supporting BMW’s move to raise its stake in the BBA venture.
In anticipation of this move being concluded in 2022, BMW started investing heavily in its plants in China and its largest production site in the world is now located there, the Shenyang plant. The Chinese market is the largest and fastest growing in the world, so this new Shenyang plant will continue to grow over the next few years, as the German car maker wants to expand the portfolio of cars made there.