BMW will pay €3.7 billion to take majority control of its Chinese joint venture after securing the necessary licence from Beijing, as global automakers seek a tighter grip on business in the world's biggest car market.
The German carmaker said on Friday it was increasing its stake in the venture with Brilliance Auto Group to 75 per cent from 50 per cent, as announced in 2018 when China said it would start relaxing ownership rules in the auto industry.
China said at the time it would remove foreign ownership caps for companies making fully electric and plug-in hybrid vehicles in 2018, for makers of commercial vehicles in 2020, and for the wider car market by 2022.
BMW said the deal would have a one-off positive effect of €7 billion-€8 billion on the financial results of its automotive business, and boost free cash flow by about €5 billion.
"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.
Volkswagen took majority control of its electric vehicle production joint venture JAC Volkswagen in 2020.
Mercedes-Benz owns 49 per cent of its joint venture in China. – Reuters
