Saturday, November 17Wellcome!

BMW gained independence in China

In 2017, BMW sold 560,000 cars in China, of which only 400,000 were locally produced, that is, they descended from the conveyors of factories in Tesi and Daduna (Shenyang districts, a million-plus city in the southeast of China). At the moment, there are localized 1 Series (and here it is unique, front-wheel drive), compact 2 series Active Tourer, 3 Series, 5 Series, X1 and X3 crossovers, and all other models are assembled for China in other countries, mainly in the USA.

In the light of the trade war between the US and China launched by Donald Trump, trade between the two countries has become more complicated, and both powers are now trying to pull major international corporations to their side. In particular, the Chinese government allowed foreign auto companies to gain control over their joint ventures in the PRC – before, only ownership on an equal footing (50/50) with a local partner was allowed. Removing restrictions on a par with easing fiscal policy should attract a new stream of Western investment in China, and BMW was the first in the automotive sector to open a cash tap.

Today it became known that the German company will increase its share in the joint venture of BMW Brilliance Automotive from 50 to 75%. The deal is estimated at 3.6 billion euros and will be closed in 2022, and contact with the Chinese side will be extended until 2040. Finding control over its factories in China will allow BMW to include them in its official statistics, that is, the global output will rise sharply. An additional plant is planned to be built at Tesi, and the site in Daduna is to be upgraded – 3 billion euros have already been reserved for this. The expansion of production will create at least 5,000 new jobs for the Chinese population.

By 2020, BMW wants to produce 650,000 cars a year in China, localize the high-margin X4, X6 and X5 crossovers here, which are still imported to China from the USA. That is, the production in America will decrease, and therefore the American hard workers will have to be cut down – they will, of course, say “thank you” to President Donald for this. The future flagship crossover X7, and the electric version of the crossover X3 will be registered in China. Localization of Mini models is a separate story: BMW will be launching them jointly with Great Wall Motors.

Following BMW, other large auto companies may take control of their joint ventures in China, but the bosses of Daimler and Honda, in particular, previously stated that there is no urgent need for this. Perhaps they are waiting for some interesting proposals from Trump?

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