After securing the necessary license, BMW will take a controlling share of its joint venture business in China. The German automaker will own 75 percent of BMW Brilliance Automotive Ltd. (BBA).
The automaker will pay €3.7 billion ($4.2 billion USD at current exchange rates) in order to increase its share in the company from 50 percent to 75 percent. The move will give it more control over the business that allows it to sell and produce vehicles in the world’s largest automotive market.
BMW first announced plans to increase its share in BBA in 2018, when China relaxed ownership rules in the auto industry. Although it was the first to announce its desire to expand its ownership over its JV partner, Volkswagen took a majority share of its JV, JAC Volkswagen in 2020 and others have followed suit.
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The move will be important as BMW only expects sales to grow in China in 2022, reports Reuters. After seeing Mini and BMW sales increase by nine percent last year, one of the JV’s plants is being expanded while another is being built to produce fully-electric vehicles alongside hybrids and ICE vehicles.
“Our extended joint venture contract lays the foundation for further mutual growth and progressive development … It paves the way for balanced development in the three main regions of the world,” Chief Financial Officer Nicolas Peter said.
The deal will have shorter-term advantages, too. The automaker said that its increasing ownership stake will have a one-time positive effect of €7-8 billion ($7.9-9.1 billion USD) on the financial results of its automotive business and will boost free cash flow by about €5 billion ($5.7 billion USD).
BMW founded its JV partnership in 2003 and it is set to remain in place until 2040.
