SHENYANG, China (Reuters) - Germany’s BMW (BMWG.DE) said it will take majority control of its main China joint venture for $4.2 billion, the first such move by a global carmaker as Beijing starts to relax ownership rules for the world’s biggest auto market.
The luxury carmaker will pay 3.6 billion euros to raise its stake in its venture with Brilliance China Automotive Holdings Ltd (1114.HK) to 75 percent from 50 percent, it said in a statement. The deal will close in 2022 when rules capping foreign ownership are lifted.
The move should give BMW the confidence to shift more production to China, boosting profits amid a whipsawing trade war between Washington and Beijing that has raised the cost of imports.
The deal also marks a milestone for foreign carmakers which have been capped at owning 50 percent of any China venture and have had to share profits with their local partner.
“We are now embarking on a new era,” BMW Chief Executive Harald Kruger said in a speech at an event in the northeast Chinese city of Shenyang on Thursday. He thanked Chinese Premier Li Keqiang who he said had “personally supported” the plan.
Beijing has been keen for global carmakers to invest more in China. It is also easing restrictions that cap foreign ownership of electric vehicles businesses at 50 percent this year.
The rule changes have already helped Tesla Inc (TSLA.O) gain Beijing’s approval for a wholly owned China manufacturing and sales company in Shanghai, marking the first time a foreign carmaker will be able to establish a full presence
