Germany's BMW will lift its stake in its venture with Brilliance China Automotive (1114) to 75 percent from 50 percent, with the deal closing in 2022 when rules capping foreign ownership for all auto ventures are lifted.
The luxury carmaker will pay 3.6 billion euros (HK$32.66 billion) to take control of its main joint venture in China, the first such move by a global carmaker as Beijing starts to relax ownership rules for the world's biggest auto market. The move will likely spur BMW to shift more production to China, helping to protect profits amid a whipsawing trade war between Washington and Beijing that has raised the cost of BMW importing cars manufactured at its US plant in South Carolina.
The deal also marks a milestone for foreign carmakers which have been capped at owning 50 percent of any Chinese venture and have had to share profits with their local partner, and could encourage rivals such as Mercedes maker Daimler.
"We are now embarking on a new era," BMW chief executive Harald Krueger said in a speech in Shenyang, northeast China, where the joint venture is based. He thanked Chinese premier Li Keqiang, whom he said "personally supported" the plan.
The joint venture plans to add a new plant, spending over 3 billion euros on a large-scale expansion of the existing production facility, Krueger said.