State-owned Brilliance Auto is the parent company of Brilliance China Automotive Holdings Ltd, which builds the likes of the 3-Series, 5-Series and 1-Series, as well as the X1 and X3 SUVs locally for BMW.
The company is reportedly facing scrutiny from investors who are worried about the former’s ability to handle its debt load following the effects of the coronavirus pandemic, and how it went on to affect profits, as per Autonews Europe.
There has been speculation that the group will struggle after its banks set up a creditor committee to coordinate claims on the company’s debt. According to Bloomberg, the group needs to pay 1.37 billion yuan ($200 million) in outstanding local bonds this year.
Read: BMW Stretches Out, Introduces Long-Wheelbase 3-Series For China
The fallout of this recent economic crisis within the car industry has already forced Brilliance Auto to sell some of its shares in its subsidiary to another state-owned unit. Furthermore, the company will also give up control over its joint venture with BMW by 2022.
BMW 3-Series LWB pictured
In 2019, Brilliance Auto earned a net profit of 11 billion yuan ($1.6 billion), thanks mostly to contributions from the previously-mentioned joint venture with BMW. However, sales for the joint venture are expected to fall this year because of the pandemic.
According to a statement released earlier this week, the Chinese carmaker has reportedly “repaid all bonds that have matured without any default,” claiming that its operations will go on as normal.
Investors will now be keeping a close eye on Brilliance Auto’s ability to honor its debt repayment in the next two years.
